Exploration and production
A $77 billion chunk of Petrobras' budget has been set aside for yet-to-be-developed offshore projects, with 10 Petrobras-operated floating production, storage and offloading (FPSO) vessels due online over the next five years. This strong pipeline of projects will collectively add more than 1.9 billion barrels per day (bpd) of oil production capacity for Petrobras in 2025-2029. The start-up of the 225,000-bpd processing capacity Almirante Tamandare FPSO this month, the Alexandre de Gusmao FPSO, and the P-78 floater later this year will add 600,000 bpd of capacity. Petrobras also confirmed a one-year delay to the P-80 FPSO and the Barracuda and Caratinga revitalization projects and at least a 10-year delay to the Albacora field revitalization project, previously slated for 2027. The SEAP projects have also been delayed after unsuccessful attempts to contract vessels.

Petrobras has boosted its non-domestic exploration budget by 30% compared to the last business plan, reflecting its growing interest in diversifying its portfolio. While continued exploration in Brazil's equatorial, southern, and southeastern margins will remain critical to the Rio de Janeiro-based player, finding international barrels will go some way to addressing the reserves replacement challenge facing the company. Petrobras' key initiatives outside of Brazil include the appraisal of the deepwater Sirius discovery offshore in Colombia and frontier exploration in three blocks off Sao Tome & Principe and a block offshore South Africa.

Portfolio diversification
The remaining $34 billion will be divided among the midstream, downstream and low-carbon arms of Petrobras. Allocated midstream and downstream investments have seen a significant upward revision for the five-year period, with an increase from $12 billion in the old plan to $16 billion in the new plan, underscoring Petrobras' focus on strengthening refining and transporting capabilities. Petrobras' return to the fertilizer segment and a $900 million commitment made for an operational ammonia plant is further evidence of a push towards the midstream and downstream businesses.

The low-carbon business has seen stagnant growth in spending when compared to the previous business plan, with the same budget allocated for the next five-year period. While its budget has been adjusted downwards for 2025 and 2026, in line with Petrobras' strategy to prioritize operational improvements and traditional energy sectors before scaling up investments in energy transition initiatives, the under-evaluation budget for low-carbon for the five-year period has been notably increased. However, it is also important to note that the company is recalibrating its low-carbon investments, with a reduced emphasis on offshore wind and an increased focus on ethanol.

Energy transition investments, which combine low carbon initiatives and decarbonization strategies in the legacy business lines, have seen a 41% increase in budget under the new strategic plan, with $16.3 billion allocated, around 15% of Petrobras' total capital expenditure. A notable shift in the plan is the detailed focus on ethanol, now allocated $2.2 billion, highlighting its new leading role within the company's sustainable products diversification strategy. Biorefining continues with its same allocation of $1.5 billion, and biodiesel and biogas are each given $600 million. Other low-carbon energy investments rose from $300 million to $1.4 billion, such as hydrogen and carbon capture, utilization and storage, which received a more significant focus. Compared to the previous plan, the wind and solar energy budget has decreased by 17%.

Therefore, the new Petrobras business plan ensures continuity in the E&P pipeline of projects with a more bullish view of opportunities outside Brazil. Midstream and downstream saw an important increase in focus, and finally, low-carbon diversification has shifted focus from renewable power generation to bioproducts, namely ethanol, biodiesel, and biogas.

Authors: 

Flavio Menten

Analyst, Upstream Research
flavio.menten@rystadenergy.com

Vitor Fernandes

Analyst, Upstream Research
vitor.fernandes@rystadenergy.com

Daniel Leppert

Research Director, Latin America
daniel.leppert@rystadenergy.com

(The data and/or forecasts in this column are Rystad Energy's, and the opinions are of the authors.)