Petrobras slashes 5-year spending plan by 25%

Petroleo Brasileiro SA has set its planned spending for 2017-2021 to $74 billion, down 25% from its 2015-2019 plan, under the direction of new Chief Executive Officer Pedro Parente (OGJ Online, May 20, 2016).

The Brazilian state-owned firm said it hopes to divest $19.5 billion in assets over the next couple of years, pledging to exit biofuel production, LPG distribution, fertilizer production, and investments in petrochemicals. Petrobras has maintained a divestment target of $15.1 billion for 2015-16.

Additional costs savings are expected through increasing strategic partnerships in exploration and production, refining, transportation, logistics, distribution, and sales.

The moves are part of an effort to cut the firm’s $125 billion debt load. The financial target determines that the company's net debt be equivalent to 2.5 times its cash generation in 2018. According to Petrobras’ 2015 annual balance sheet, this index reached 5.3 times.

Most of the investment under the new 5-year plan, 82%, will be directed toward exploration and production activities, 17% to refining and natural gas, and the remaining 1% to other areas.

Petrobras is targeting 2.8 million b/d in oil and natural gas liquids production by 2021, sustained by operating performance and the application of new technologies. The firm notes the average time to build an offshore well in the Santos basin presalt cluster has been cut to 54 days in 2016 from 152 days in 2010.

Production startups are expected in 2017 from the Tartaruga and Mestica projects in the post-salt Campos basin, Lula Norte and Lula Sul in the Santos basin presalt, and the Libra extended well test. Next year, Berbigao, Lula Extremo Sul, and Buzios 1, 2, and 3, all in the presalt cluster, are expected to come on stream.

Slated to begin flow in 2020 are Buzios 5, the Libra pilot, and the Sepia pilot in the presalt, and Module 1 of the Marlim revitalization project in the Campos basin post-salt area. In 2021, production startup is scheduled for Module 2 of Marlim and the integrated Parque das Baleias project in the Campos basin, as well as Itapu and Libra 2.

"In the next couple years, we will concentrate on recovering Petrobras' financial strength as an integrated energy company that is focused on oil and gas,” said Parente. “In the total 5-year horizon this plan encompasses, we propose that the company will have been restructured, that it [has] unquestionable governance and ethical standards in order to support increased, but realistic production, and that it be able to invest and position itself in the transition process the global energy market is going through.”

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