RIO DE JANEIRO (Reuters) -Brazilian state-run oil firm Petrobras’ five-year investment plan will see its first cut under President Luiz Inacio Lula da Silva’s government due to lower oil prices, three sources familiar with the matter told Reuters.
The new plan, to be unveiled on Thursday, is set to have a capital expenditure about 2% lower than the previous $111 billion plan for the 2025-2029 period, dropping to around $109 billion, the sources said, adding that a final decision is still set to be made by the board.
This would be the first drop since the plan for the 2021-2025 period under former President Jair Bolsonaro’s administration, when Petrobras was undergoing a series of divestments.
Since taking office, Lula has pushed the oil firm to invest more in order to boost the country’s economy. Next year, the leftist leader is set to seek a fourth, non-consecutive term as president.
In 2026, there is little room to maneuver in planned investments, as most of them have already been contracted, the company told analysts in an earnings call. Under the current plan, Petrobras has around $19.6 billion in capital expenditure for next year.
Brent crude oil was trading around $62.35 a barrel on Wednesday, lower than the average recorded in the first nine months of the year of $70.85, which was already a 14.4% drop compared to the same period in 2024.
ADAPTING TO LOWER PRICES
With current oil prices, Petrobras needs to adapt and do more with less, a source said, adding that the basic premise is to not increase the company’s debt or change its dividend policy.
The plan will focus on increasing production and refining by expanding the capacity of existing units, with the company mapping out platforms that could lead to boosted output and planning a revamp for almost all of its refineries, a source noted.
The company is looking for other platforms that could follow in the footsteps of the Almirante Tamandare floating production unit, designed for an output of 225,000 barrels per day, but which in October achieved a record of 270,000 bpd.
In line with cost reduction, Petrobras may reassess projects and negotiate with suppliers, a source said.
(Reporting by Rodrigo Viga Gaier; Writing by Fabio Teixeira; Editing by Bill Berkrot)
Comments