Petrobras Vows to Go Faster on Transition

Petrobras’ new CEO has vowed to strengthen the company’s commitment to the energy transition under the new leftist government of President Luiz Inacio “Lula” da Silva.

Jean Paul Prates promised a transition approach with “no drama” that would see “big things happening but in a smart way.”

“We will go faster, and we will bring others with us,” he told an audience at CERAWeek by S&P Global this week.

Petrobras aims to keep the bulk of its present focus on the country’s oil and gas pre-salt juggernaut, and had already been investing in new-generation biofuels, pre-salt carbon capture and R&D for new opportunities. But Prates reinforced indications that the company would expand its horizons into other low-carbon business lines through a new business plan since the leadership change

“We have the new frontiers of wind and solar, onshore will be on the radar, as well as hydrogen and biogas,” he said, citing as one example the company’s expanded offshore wind collaboration with Equinor unveiled this week.

That falls in line with Lula’s climate and energy policy priorities. One forthcoming step in Brazil’s congress may soon be a legal framework for the four key areas: hydrogen, offshore wind, carbon capture and biogas to help enable investments in those technologies.

Prates, a former lawmaker from Rio Grande do Norte, helped spearhead the introduction of those measures in Brazil’s senate prior to his appointment to the Petrobras post.

“President Lula was clear when we came back to office, we have to lead this moment globally,” Prates added. “But we can definitely do the right things very gradually and very rationally … to show the world we can do energy transition with energy security.”

Government Role 

In a sideline news conference with journalists, Prates downplayed investor concerns about government intervention, echoing comments from the company’s investor call last week that the partnership should be seen as a strength.

As such, Brazil’s 90-day pause on Petrobras’ divestment plan shouldn’t be seen as an “intervention” or a “drastic” cause for alarm.

“It doesn’t mean at all any disruption of contracts or any undoing of specific plans. We just want to talk to the people who are buying,” Prates said. “It’s just a last chance of checking everything out since we have a change in the major partner, which is the government.”

On Brazil’s recently imposed crude oil export tax, Prates reinforced that he saw it as a temporary move and aims to engage with the government on the measure, from which he expects a $1 billion impact.

“Instead of fighting or calling it stupid or whatever, we have to check what are the reasons and try to appease” the government, he said.

Oil Markets 

Exports have continued to be vital for Brazil amid the upheaval of global markets following the Ukraine crisis. But Prates said he doesn’t see much impact from the global G7 price cap.

“We didn’t see so much of a benefit up to now … it didn’t really make very much of a difference,” he said. “The market is never balanced, it’s always shaking around.”

His hope, he said, was that “dialogue” would be able to end the war, and today’s uneasy status quo.

With Brazil both a major consumer and major exporter, “We are in an unstable but comfortable position,” he said.