Jean Paul Prates, the top of Brazil’s state-controlled oil firm, isn’t deterred by the world’s power transition. He says Latin America’s largest producer ought to preserve growing fossil gas output for many years to come back.
“We’ll get market share,” Prates, chief government officer of Petrobras, mentioned in an interview in Rio de Janeiro. “We stands out as the final to provide oil on the planet.”
His assertion of Brazil’s ambition echoes the coverage of different oil exporters like Saudi Arabia, who argue that investing in fossil-fuel growth is suitable with a worldwide ambition to succeed in internet zero carbon emissions. Many, together with the Worldwide Vitality Company, disagree, claiming there’s no room for anybody to focus on elevated crude output if the world goes to succeed in its local weather targets.
The world has discovered itself in a good place as restricted fossil gas provide amid a scarcity of funding sparked a worldwide power disaster that raised shopper payments and worsened world inflation. Even leaders who place themselves as fighters towards local weather change comparable to US President Joe Biden have known as for will increase in oil output to assist tame rising prices.
During the last 20 years, Brazil has emerged as a significant oil producer, diverging from lots of its Latin American friends. Drillers have exploited big offshore oil fields, referred to as pre-salt, as a result of the crude is trapped underneath a geological layer of salt. Petrobras operates most of these fields with worldwide firms comparable to Shell Plc holding minority stakes.
Appointed by President Luiz Inacio Lula da Silva firstly of his third time period earlier this 12 months, Prates mentioned that the oil manufacturing will stay the highest precedence. Funding in wind energy and different renewable applied sciences at Petroleo Brasileiro SA, as the corporate is formally identified, will likely be modest compared.
Prates’ feedback could ease considerations amongst some minority traders that the brand new administration would prioritize non-core funding tasks over the oil and fuel enterprise.
Whereas Lula has championed the battle towards local weather change, pledging to gradual deforestation within the Amazon, he’s additionally been a supporter of Brazil’s oil trade. The growth in manufacturing supplied rising tax income throughout Lula’s first two phrases, serving to to finance his bold social spending.
Brazil’s output is ready to succeed in a report 3.4 million barrels a day this 12 months and can continue to grow till 2030. After that, the nation will want new discoveries to take care of and develop manufacturing.
“We got here out very late to this sport as a giant producer, however we’ve got to maintain the ball rolling,” mentioned Prates, 54, who was a senator in Lula’s Staff’ Occasion earlier than his appointment.
He mentioned the precedence will likely be exploiting present finds within the pre-salt areas and discovering recent ones, whereas trying to open up new basins in different components of Brazil, together with the so-called equatorial margin within the far north of the nation. That area has comparable geology as areas off close by Guyana, the place Exxon Mobil Corp. has discovered billions of barrels.
Petrobras is able to begin exploration drilling within the area, however is awaiting approval from regulators. Its proximity to the mouth of the Amazon river has made it a controversial location for drilling and drawn concern from Brazil’s setting minister, Marina Silva.
“The state of Brazil must determine if that goes on or not,” Prates mentioned. “All we are attempting to do is to search out oil.” If Petrobras will get the go-ahead, drilling might begin on an exploration nicely as quickly as April, he mentioned.
Petrobras will take a look at investments in offshore wind as a result of the corporate has expertise executing large tasks in Brazil’s Atlantic Ocean. It’s exploring partnerships with European oil majors, together with Norway’s Equinor, he mentioned.
“That is an setting we already know, and we’ve got in Brazil undoubtedly the most effective setting for funding in offshore wind on the planet as a result of the local weather is favorable,” he mentioned. The remainder of the Petrobras push into the power transition will contain two areas the place it already has experience: carbon seize and biofuels.
Prates mentioned Petrobras — which paid a report dividend final 12 months, pushed by increased oil costs and a wide-ranging divestment program — ought to strike a greater steadiness between channeling money to shareholders, together with the Brazilian state, and funding.
“We should always have a extra balanced view of that, with out neglecting the massive attractiveness of getting large dividends,” he mentioned.