Brazilian Petrobras increases five-year investment plan to $78 billion

Petrobras, Brazil’s largest oil and gas company, on Wednesday announced a 15% increase in its five-year spending plan to $78 billion, with some changes to the company’s strategy to focus on fuel production.

Petrobras’ plan, approved under President Jair Bolsonaro, could be phased out next year as the newly elected government, which took office on January 1, is likely to change the company’s top management and rethink its strategy.

According to the statement, Petrobras has increased its planned investments between 2023 and 2027 by $10 billion compared to the plan for 2022-2026.

The increase in spending is coming even though the 2023 production target is being lowered from 100000 barrels of oil equivalent per day to 2.6 million barrels of oil equivalent, to the same level as in 2015. The additional investment of money is partly due to higher drilling costs.

The company has also accepted additional short-term drilling for existing projects on top of the company’s long-term breakeven of $35 a barrel.

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Exploration and production will account for 83% of expenses, and by 2027 production is planned to increase to 3.1 million boed.

Petrobras also increased investment in carbon reduction to 6%. In addition, the company more than doubled its decarbonization fund to around $600 million.

President Luiz Inácio Lula da Silva said that Petrobras should not only invest in fossil fuels but return to that status as an energy giant.

Presidential representatives met with Petrobras CEO Cayo Paes de Andrade this week and asked him to suspend the sale of the Petrobras refinery in Manaus, which has been signed but is pending closure.

Petrobras was supposed to carry out the sale, which was estimated at between $10 billion and $20 billion.

Lula is expected to make a decision on the next CEO of Petrobras in mid-December.