Petrobras, Equinor Eye Offshore Wind Project

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Brazilian state oil company Petrobras said it is has teamed up with Norway's Equinor to evaluate the environmental feasibility of a large wind project offshore Brazil.

The Aracatu wind farm project, located about 20 kilometers off the coast in the Campos Basin, would generate up to 4 gigawatts of energy at full capacity.

Petrobras has been telling investors for some time about its plans to study a range of new energy projects that could meet its returns criteria. Executives had hinted that offshore wind and hydrogen could be part of the mix, but the company has divulged few specifics on what exactly it might be considering. Its existing energy transition strategy has been largely focused on reducing carbon emissions, ramping output of its low-cost and lower-carbon pre-salt oil, and advancing a program of next-generation biofuel production.

“Brazil's potential for offshore wind power generation brings promising opportunities for diversifying the country's energy matrix,” Petrobras Institutional Relations and Sustainability Director Rafael Chaves said.

Equinor, meanwhile, has targeted a range of energy transition opportunities in Latin America, including in Brazil and Argentina. The company has leaned hard into offshore wind as part of its ambitious energy transition strategy, and has been working on the Aracatu project in particular since at least 2020.

“Equinor sees high potential for offshore wind in Brazil, a market with a long Equinor history and a strong growth outlook," the company said in a statement, noting that the Aracatu project is still in the early stages.

Brazil holds a prominent place in the Equinor's hydrocarbon portfolio as well. The company last year green-lighted the $8 billion Bacalhau pre-salt project in partnership with Exxon Mobil, and is also contemplating a low-emission gas development, BM-C-33.

The Aracatu wind farm project would be large and ambitious, rivaling Equinor's massive $12 billion Dogger Bank scheme off the coast of the UK. Equinor is also active in the US with the Empire Wind and Beacon Wind offshore wind projects, which are due on line later this decade.

This is also not the first collaboration between Petrobras and Equinor on potential low-carbon ventures. The two companies signed a memorandum of understanding in 2018 to study renewables opportunities offshore Brazil.

Renewable Changes

As recently as late 2019, Petrobras was factoring in wind and solar as well as biofuels as part of its business plan. But soon after, under a strong mandate to reduce both debt and capital spending, Petrobras scrapped that focus and included several smaller wind assets as part of its sprawling multibillion divestment program.

Then-CEO Roberto Castello Branco was skeptical about the returns potential of renewable energy.

“We don't have the competence to thrive in this type of business, it is different from oil,” he said on a 2020 earnings conference call. “In oil we are the best, but we are not going to lose money just because European companies are doing so and so.”

Since then, Petrobras has come back around and exhibited more openness to renewable energy. The company has also changed CEOs twice in the last two years, and is now in a considerably better financial position after paying down debt and riding high on much-improved commodity prices this year.

NOCs, Corporate Strategy , Renewable Electricity
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