RIO DE JANEIRO: Petroleo Brasileiro SA (Petrobras) is pushing to extract as much oil as possible from its existing fields in Brazil while simultaneously hunting for new reserves to prevent production from starting to decline in the 2030s.

The mantra “all the oil counts” will guide the company’s next strategic plan that will be unveiled in late November, members of the management team told reporters on Monday.

The Brazilian oil giant is looking to revitalise older fields such as those in the Campos basin, where a low recovery rate of 17% “bothers” management, chief executive officer Magda Chambriard said.

The company should finish by early next year studies to refurbish four oil platforms in the Campos Basin that would otherwise be scrapped, she said.

At stake is how fast Brazil’s overall production grows at a time oil prices face multiple headwinds.

The Organisation of the Petroleum Exporting Countries and its allies is poised to begin restoring output at a time that demand in China is faltering.

Petrobras has the challenge of bringing new projects into production while it tries to contain how fast its older fields go into decline, clouding the outlook for how much growth will come from Brazil.

The International Energy Agency is forecasting Brazil’s production to grow 190,000 barrels a day next year.

Meanwhile Jefferies Financial Group Inc expects production from Petrobras, which operates about 90% of Brazil’s output, to be flat in 2025.

Petrobras has managed to accelerate some of its production projects.

It will start operations at as many as three floating production vessels before the end of the year, adding 505,000 barrels a day in production capacity that will increase gradually.

Some of them, like production vessel Maria Quiteria, were originally expected to start operations in 2025.

Petrobras is also working with suppliers to make it more economical to build the production units the company needs to continue expanding output, particularly at smaller fields with lower volumes.

“We’re sending a message to the market. Brazil needs more affordable platforms” for offshore projects, Chambriard said.

The oil giant is optimistic that Brazilian environmental authorities will approve a licence to drill a well in the Foz do Amazonas basin in the so-called Equatorial Margin because it has met all the requirements, the head of exploration and production, Sylvia dos Anos, said.

Petrobras’s overall investments won’t change significantly from the previous US$102bil five-year plan, Chambriard said.

Management is still deciding on the final amount for 2025 to 2029, she added.

The Rio de Janeiro-based oil company will keep its dividend policy of paying 45% of free cash flow unchanged.

However, it may adjust its benchmark for optimal cash-holdings, chief financial officer Fernando Melgarejo said.

The figure is relevant because it contributes to how much the company pays out to shareholders in extraordinary dividends.

Petrobras plans to distribute any cash surplus as long as it doesn’t undermine the company’s financial sustainability, he said.

Analysts at Jefferies see a 10% increase in Petrobras’s 2025 to 2029 capital expenditure and a limited scope for special dividends in 2025, unless there is further improvement in oil prices.

The consultancy expects Petrobras to face equipment constraints, and a push to increase natural gas supply to the domestic market should moderate production growth for the next two to three years, it said in a note to clients. 

 - Bloomberg