Petrobras slashes spending, output targets
Petrobras, Brazil’s state-run oil company, has revealed its five-year spending plan, according to which, the company will spend $130 billion in the 2015-2019 period. Total investments have been slashed by 37%, compared to the previous plan.
Petrobras has said that with this plan it plans to reduce the company’s debt and generate value for shareholders.
According to Petrobras, majority of the investment, 83% or $108.6 billion will be allocated for oil exploration and production (E&P) in Brazil, especially in the pre-salt. In other business segments, investments are targeted basically at maintaining operations and projects related to transferring the oil and natural gas produced, the company has explained.
Of planned investments in E&P, 86% will be allocated to production development, 11% to exploration and 3% to operational support. US$ 64.4 billion will be earmarked for new production systems in Brazil, including 91% of this figure for the pre-salt.
Further explaining the rationale for the investment cuts Petrobras said: “The reduction in Petrobras’ investments follows a global trend in the oil and gas industry and is directly linked to the in oil prices on the world market. All companies in the sector, whether majors, national or independent, have been forecasting a cut in investments in all areas, including E&P. Average global E&P investments this year are down 20% on the 2014 figure.”
Output forecast cut
Petrobras has also given up on its optimistic production forecast of reaching production levels of 4.2 million barrels of oil per day by 2020. In its latest update, Petrobras has said that the production targets for oil, NGL (natural gas liquids) and natural gas in Brazil have been revised to reflect the postponements of low-maturity projects and delays in the delivery of production units, putting the blame to limitations of Brazilian suppliers.
The company now plans to reach total oil and gas production of 3.7 million boed in 2020, by which time the pre-salt will account for 66% of total oil production in Brazil.
Petrobras now plans divestments for the period between 2015 and 2016 of $15,1 billion (30% in Exploration and Production, 30% Downstream and 40% Gas and Power). The Plan also includes efforts to restructure business, retire assets and further divestment, totaling US$ 42.6 billion between 2017 and 2018.
Petrobras did not specify which assets it plans to put up for sale, also saying divestment is common among large oil companies throughout the world.