Petrobras targets oil output of 2.7 mil b/d by 2025
Production in 2021 to retreat to 2.23 mil b/d
- Pandemic, asset sales to undercut output
- Group plans to invest $55 billion in 2021-25
By Jeff Fick/Platts
Petroleumworld 11 30 2020
Brazilian state-led oil company Petrobras plans to spend $55 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, the company said 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 $55 billion investment budget represents a significant retreat from the $75.7 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 $10.2 billion in 2021, the company said. That will rise to $11 billion in 2022, $11.9 billion in 2023, $11.6 billion in 2024 and $10.5 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 $46 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.