November 19, 2021

A Petrobras FPSO offshore Brazil - File image: Petrobras

A Petrobras FPSO offshore Brazil – File image: Petrobras

Petroleo Brasileiro SA is expected to commit between $60 billion and $70 billion in capital expenditure (capex) in its next multi-year business plan as Brazil’s state-controlled oil company focuses on exploration and production in subsalt areas, two sources said on Thursday.

The 2022-2026 Petrobras plan, to be released on Nov. 25, is in the final phase of drafting. But it will raise capex from the current $55 billion of the 2021-2025 program, the sources with knowledge of the matter said.

The energy transition to lower emission fuels creates the need to focus on assets with a faster return, like subsalt oil exploration and production, a source said.

Petrobras cut capex by 27% last year as a way to conserve cash during the COVID-19 pandemic.

Petrobras wants to speed up exploration in the subsalt area, a second source said. Although the company is raising capex volumes, they are still below the first figures the company forecast for the plan 2020-2024 of around $75.7 billion.

The company does not expect higher capex numbers to affect debt ratios. The target for gross debt should be around $60 billion, the sources added. In the third quarter, Petrobras reduced gross debt to $59.6 billion, bringing forward a 2022 target.

Petrobras will also set targets for the conservation of green areas and reforestation projects to reduce its carbon footprint, the sources added.

The company declined to comment on the matter. 

(Reporting by Rodrigo Viga Gaier in Rio de Janeiro, writing by Tatiana Bautzer, editing by Chris Reese and Marguerita Choy)

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