Page 11 - LatAmOil Week 13 2020

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Then on April 1, Petrobras opted to keep the cuts in place rather than let them expire, citing concerns about market oversupply. It also said it would expand the scope of the reduction from 100,000 bpd to 200,000 bpd until further notice. Altogether, this will bring Brazil’s total crude output down by more than 9% on the February figure of 2.139mn bpd.
In its first announcement, Petrobras said that in order to make the cut, it would take several shallow-water platforms that have higher pro- duction costs off line. Those platforms account for 23,000 bpd of output and were already slated for closure before oil prices started sinking in early March, it said.
The NOC has not identified any candidates for additional cuts, but it did say on April 1 that it would take “market and operational condi- tions” into consideration when deciding where to make adjustments. It also said it would con- tinue to evaluate market conditions and tailor its production policies accordingly.
The Rio de Janeiro-based firm also said in a statement posted on its website that it had delayed a dividend payment and reduced invest- ments this year by nearly a third to $8.5bn. The BRL1.7bn ($327.3mn) dividend payout, which was scheduled for May 20, is now due to occur in December, it said.
The statement also noted that the firm had delayed its next general shareholders’ by three days, from April 24 to April 27.
In other measures, Petrobras said it would shave BRL2bn ($385mn) in operational expenditures in the short term by suspending new contracting processes over a period of 90 days. It also said it would draw $700mn from its
revolving credit lines, in addition to the planned withdrawal it announced earlier in March.
Last December, the heavily indebted com- pany said it was intending to sell $20-30bn worth of assets, including eight Brazilian refin- eries, in the 2020-2024 period. The firm is trying to pay down debt and recover from the ongoing corruption scandal by divesting non-core assets to focus on the deepwater pre-salt area.
During a conference call with investors last week, Petrobras CEO Roberto Castello Branco said he did not believe that potential buyers had lost interest in the firm’s assets, according to a Reuters report. Anelise Lara, the head of down- stream operations, agreed, saying that recent market developments were not likely to affect the prices of eight refineries that Petrobras is selling.
Castello Branco said, though, that the com- pany was not expecting a “significant recovery” in oil prices unless there was some unforeseen event, Reuters reported.. ™
Brazilian offshore gas operators need joint infrastructure, ANP says
BRAZIL’S state oil and gas regulator ANP has said that domestic operators need to develop joint solutions to extract natural gas in offshore areas.
The regulator recommended in a report that firms with development projects in areas that are near each other should form hubs. This would allow companies to use infrastructure jointly, even if it serves fields operated by different consortia.
“It is important to observe that projects that will potentially use the same transport and pro- cessing infrastructure should have co-ordinated evolutions and a firm investment commitment, which increases complexity,” the watchdog said. It also suggested that companies create spe- cial-purpose companies to operate the shared
infrastructure.
Existing infrastructure is not adequate to the
task of transporting gas from Brazil’s offshore pre-salt fields to the coast. The region is served by pipelines and floating regasification units (FRUs) that are set to run out of spare capacity by 2025.
“There is an urgent need to start promoting those projects as soon as possible to avoid bot- tlenecks in pre-salt natural gas flow after 2025,” ANP said.
It also made an argument for starting the planning process sooner rather than later. “Pipeline projects are complex and involve long periods for implementation. They demand long- term financing, which limits the range of poten- tial financiers,” it said.
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The Brazilian NOC will cut oil output by 200,000 bpd (Photo: Petrobras)
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