[1/4]Brazil’s state-run oil company Petrobras Chief Executive Jean-Paul Prates attends an interview with Reuters in Rio de Janeiro, Brazil July 17, 2023. REUTERS/Ricardo Moraes
RIO DE JANEIRO, July 17 (Reuters) – Brazil’s state-run oil company, Petrobras (PETR4.SA), will keep total investments in its next five-year business plan in line with the last, CEO Jean Paul Prates told Reuters on Monday , allaying market fears of a spending spree under the new leftist government.
Petrobras is preparing to preview its upcoming 2024-2028 business plan next month, Prates said, ahead of approving the final plan at the end of the month.
In an interview from Petrobras’ offices in Rio de Janeiro, Prates said the value of investments in the new plan “shouldn’t differ much because from one year to the next you can’t make many moves.”
Analysts cheered his outlook for capital expenditures similar to the $78 billion laid out in a 2023-2027 plan approved last December, before President Luiz Inacio Lula da Silva took office.
“One of the concerns we’ve seen from investors was related to a potential capex increase in the company’s upcoming strategic plan,” Goldman Sachs analysts wrote in a note on Monday evening. “As such, we believe today’s comments should be well-received by the market.”
Still, Prates said investors should not get used to the blockbuster dividends they enjoyed last year, as Petrobras’ dividend policy will be “adjusted” to the reality of a company investing in the future.
Prates said even as the new business plan will highlight a new emphasis on renewable energy, the company is still focusing on its strengths in offshore oil exploration, especially in the vaunted “pre-salt” fields off Brazil’s coast.
“Of course we will have an important investment plan with pre-salt being very important. This is a pre-salt, offshore oil company, but it will gradually transform itself,” he said.
Prates also reiterated a commitment to exploring near the mouth of the Amazon River, an area off Brazil’s northern coast that Petrobras considers a key frontier for oil and gas exploration. In May, environmental regulator Ibama denied a request from Petrobras to drill in the region.
“We consider that we will have the license sooner or later,” Prates said, adding that the company will comply with any permitting requirements and deadlines set by Ibama.
Petrobras has already appealed to Ibama’s rejection, but there is no deadline for a final decision.
“We are not going to give up on a new frontier unless we receive a definite ‘no’.”
In parallel, Petrobras could expand its exploration abroad into neighboring Guyana and Suriname in the Equatorial Margin, following Brazil’s northern coastline, Prates said. Another option, he said, would be to explore parts of the West African coast with geological similarities to Brazil’s offshore fields.
“We cannot be disconnected from being an international company,” he said.
Prates also said Brazil was eager to step up engagement with the Organization of Petroleum Exporting Countries (OPEC), after he met recently with OPEC Secretary-General Haitham Al Ghais at an event in Vienna.
The Petrobras CEO said Brazil would like to be more involved with the group’s discussions about technology and petroleum markets. However, he stressed that the country had no interest in becoming an OPEC member or taking part in production quotas.
Reporting by Marta Nogueira and Rodrigo Viga Gaier in Rio de Janeiro Writing and additional reporting by Peter Frontini in Sao Paulo Editing by Brad Haynes, Matthew Lewis and Sonali Paul
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