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Petrobras targets oil output of 2.7 mil b/d by 2025

November 27/2020

MOSCOW (MRC) --  Brazilian state-led oil company Petrobras plans to spend USD55 billion over the next five years to develop subsalt fields that will boost the company's crude oil output nearly 20% to 2.7 million b/d by 2025, reported S&P Global with reference to the company's statement in a regulatory filing Nov. 25.

"The capital allocation adheres to our strategic position, with a focus on world-class assets in deep and ultradeep waters," Petrobras said.

Petrobras' latest five-year investment plan, which covers 2021-25, continued the company's strategic shift toward Brazil's subsalt region, where a single record-setting well at the Buzios Field recently pumped about 69,000 b/d of oil equivalent. The massive potential of the subsalt led to the sale of most of the company's high-cost legacy onshore and shallow-water production. Petrobras also reached antitrust agreements with local regulators to end monopolies in refining and natural gas.

The asset sales and ongoing coronavirus pandemic likely mean a short-term retreat in output, Petrobras said. Petrobras estimated production of 2.23 million b/d in 2021, down from an expected 2.28 million b/d in 2020, the company said. Total hydrocarbons output was forecast at 2.75 million boe/d in 2021, down from an expected 2.84 million boe/d in 2020.

"Oil production in 2021 reflects the impacts associated with the COVID-19 pandemic and the divestments that take place in 2020," Petrobras said.

Petrobras was forced to delay a hefty portion of a wide-ranging subsalt maintenance program that was expected to shutter each major floating production unit in the subsalt for 15-20 days in 2020. Social-distancing measures limited the number of people allowed on board vessels, which caused a cascade of delays that will stretch into 2021, according to Petrobras.

In addition, output could be trimmed further by asset sales that are still expected to close in 2020, Petrobras said. The production forecast didn't include adjustments for such sales, which include the recently close sale of the Bauna Field to Australia's Karoon Energy, Petrobras said. The sales could further reduce production by about 600,000 boe/d, Petrobras said.

Petrobras plans to add 13 new production systems to its fleet of floating production, storage and offloading vessels, or FPSOs, over the five-year period, the company said. That was the same number of vessels expected under the 2020-2024 plan. All of the new production systems will be installed at deep- or ultradeep-water fields, Petrobras said.

Investments will also be limited to projects that have a breakeven production price of $35/b during the plan, Petrobras said.

Crude oil output was estimated to rise to 2.3 million b/d in 2022, 2.5 million b/d in 2023 and 2.6 million b/d in 2024, Petrobras said. Total hydrocarbons output was forecast to jump to 2.9 million boe/d in 2022, 3.1 million boe/d in 2023, 3.3 million boe/d in 2024 and 3.3 million boe/d in 2025, Petrobras said.

"The oil and gas production curve estimated for the 2021-2025 period, without considering divestments, indicates continuous growth focused on development of projects that generate value, with an increase in the share of subsalt assets holding lower extraction costs," Petrobras said.

Petrobras' commercial production volume, which subtracts the volumes of natural gas that is re-injected, consumed on board floating production units or burned off during production, the company said. Petrobras expects commercial production to average 2.45 million boe/d in 2021, with the measure rising to 3 million boe/d in 2025, the company said.

Petrobras also joined the plethora of international oil companies reining in spending amid reduced demand caused by the ongoing coronavirus pandemic. The USD55 billion investment budget represents a significant retreat from the USD75.7 billion earmarked for spending under the previous 2020-2024 investment plan.

CEO Roberto Castello Branco also said last year, after investments failed to meet spending targets, that the company would make more-realistic spending estimates going forward.

Spending will remain muted in the near term, with Petrobras budgeting USD10.2 billion in 2021, the company said. That will rise to USD11 billion in 2022, USD11.9 billion in 2023, USD11.6 billion in 2024 and USD10.5 billion in 2025, Petrobras said.

Most of the investment capital will go to exploration and production, which accounts for 84% of the total budget, Petrobras said. About 70% of the USD46 billion was earmarked for exploration and production investments, Petrobras said.

Petrobras' latest five-year plan also included measures to reduce emissions, including a zero-flare policy by 2030, the company said. The company also wants to reduce water consumption in its operations by 50% over the next 10 years, Petrobras said.

As MRC informed previously, Petrobras may need more than a year to divest its stake in Braskem, said Andrea Almeida, Petrobras CFO, in early July, 2020. She said during the company's recent webinar that Petrobras plans to give more time for potential investors to make offers for the company"s assets, including for its refineries and stakes at its petrochemical and fuel distribution affiliates. The divestment of Petrobras's stake in Braskem in 2020 would be desirable but "might not be possible" as the COVID-19 pandemic has changed market conditions, she said. The company plans to close part of its refinery sales in 2021. In December, Roberto Castello Branco, CEO of Petrobras, said that he wants to sell the company's stake in Braskem within a year. Petrobras owns 32.15% of Braskem.

We remind that Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem"s back burner for several years.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, excluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras" activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, PP random copolymer, propylene, HDPE, ethylene, petrochemistry, Braskem, Petrobras, Brazil, Russia, USA.
Category:General News
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