Petrobras has said it is at least two years away from making a serious push into renewable energy, putting Brazil’s state-owned oil company at odds with the direction of many other majors as they grapple with concern over climate change.
The group, which has its headquarters in Rio de Janeiro, said it was in a period of “transformation” and its focus was instead on becoming more competitive and delivering greater returns to investors.
“The pressure we have is to deliver more results to our shareholders,” Andrea Marques de Almeida, chief financial officer, said. “I believe after two years more of hard work the company will be more competitive and will be ready to decide what will be the competitive areas in renewables for Petrobras.”
The comments contrast with the rhetoric from many of Petrobras’ rivals, particularly in Europe, who are investing more in renewable energy.
Although spending is still largely focused on legacy fossil fuels, groups such as Royal Dutch Shell and BP are investing in wind and solar-power projects as well as low-carbon start-ups as they prepare for the energy transition.
Last week BP pledged to cut its greenhouse gas emissions to net zero by 2050 or sooner, with new chief executive Bernard Looney warning that the oil company had to “reinvent” itself as the world switched to cleaner energy.
Petrobras, which is Brazil’s largest company, spends $70m a year on research and development for renewable energies. However, analysts have warned that its slow transition not only creates reputational risks but could jeopardise its future competitiveness.
The group is instead focusing on extracting oil from the ultra-deep “pre-salt” deposit off Brazil’s coast. Last year it hit a production record of 3m barrels a day.
“Petrobras understands a lot about offshore. That is where we feel comfortable,” said Ms Almeida.
But she added that the company was spending $100m per year to improve carbon capture at its rigs and facilities and had set targets to reinject it underground in order to keep it out of the atmosphere.
“In the last ten years, we were able to capture 9.8m tonnes of CO2 and reinject it,” she said. “We have a goal of 40m tonnes of CO2 reinjection by 2025.”
For much of the past decade, Petrobras was at the centre of Brazil’s sprawling Lava Jato, or Car Wash, scandal that implicated scores of politicians and businessmen in a vast contracts-for-kickbacks scheme. The impact of the affair, combined with heavy-handed government interference and financial mismanagement, at one point pushed the majority state-owned group to the brink of collapse.
However, since the appointment last year of Roberto Castello Branco as president, the company has begun to turn itself round. On Wednesday it reported record profit of R$40bn ($9.1bn) for 2019, up from R$25bn the previous year. Its debt pile also fell to $87bn, down from $111bn a year earlier, according to Ms Almeida.
Petrobras wants to reduce this to below $60bn, a level that will trigger an increase in dividends paid to shareholders. “We have to focus on higher returns. We have to become more competitive.”