(Bloomberg) — Latin America’s greatest oil firm will probably be extra cautious about issuing blockbuster dividends because it strikes to turn out to be a renewable power powerhouse, Petrobras Chief Govt Officer Jean Paul Prates mentioned in an interview.
Most Learn from Bloomberg
In 10 years about half of Petrobras’s income will come from wind, photo voltaic and renewable motor fuels — and the corporate is gearing as much as make acquisitions as early as this 12 months to propel the shift, Prates mentioned in a wide-ranging interview. The Brazilian producer additionally must spend closely on oil exploration at residence and overseas to ensure that it’ll proceed pumping crude for many years.
“We should be cautious. Shareholders will perceive,” Prates mentioned from Bloomberg’s workplace in Sao Paulo, when requested about a rare dividend fee. “I’d be extra conservative than aggressive. We’re in the course of this nice resolution of turning into an oil firm in transition.”
Petrobras shares fell as a lot as 2.9% in Brazil, essentially the most throughout common buying and selling since December.
Analysts see room for Petroleo Brasileiro SA, as the corporate is formally recognized, to reward traders with billions of {dollars} in extraordinary dividends, that are anticipated to be introduced when it experiences earnings March 7. Citigroup Inc. sees area for as much as $7 billion, whereas Goldman Sachs Group Inc. forecasts as a lot as $8 billion. Petrobras was the second-biggest payer of dividends within the oil business in 2022 behind Saudi Aramco.
Petrobras’s dedication to plow forward into clear power contrasts with a few of its worldwide friends. European heavyweights Shell Plc and BP Plc have pivoted away from renewables to focus extra on fossil fuels. US oil majors Chevron Corp. and Exxon Mobil Corp. by no means made wind and photo voltaic a precedence and have centered their enterprise plans on oil and gasoline.
Learn Extra: BP Activist Sees Signal of Technique Shift However Desires Bolder Motion
The 55-year-old govt, who took the helm at Petrobras in January 2023, dominated out making “drastic turns” in technique. However he mentioned the corporate must be ready for acquisition alternatives in each renewables and oil, in addition to petrochemicals and fertilizer manufacturing. Petrobras is investing in wind and photo voltaic tasks on land in Brazil earlier than transferring into offshore wind. It’s additionally scaling up plant-based gasoline for aviation and transport, two of essentially the most troublesome industries to decarbonize.
Prates mentioned Brazil has higher circumstances for offshore wind tasks than the US or the North Sea, and that growing the business in Brazil will present a brand new line of enterprise for a similar sorts of service suppliers it makes use of for oil tasks. Certainly one of his predominant issues is that Brazil gained’t have sufficient suppliers for its oil tasks because the world begins to transition away from hydrocarbons.
“Probably the most scary factor I see in 10 years is a disaster with contractors,” Prates mentioned.
In consequence, Petrobras is holding conversations with the federal government on an industrial coverage to assist gear suppliers and shipyards in Brazil. It’s additionally figuring out methods to supply key items and providers from close by international locations and geopolitical allies.
A predominant pillar of President Luiz Inacio Lula da Silva’s financial coverage is a sweeping reindustrialization plan that may present credit score and funding to sectors like well being, protection and agribusiness, together with initiatives to foster a inexperienced transition in Brazil.
Learn Extra: Lula Unveils $60 Billion Plan to Revitalize Brazilian Business
Prates mentioned that Petrobras, as a state-controlled firm, must take part in power coverage selections with the federal government. However this coordination doesn’t imply that Lula is interfering within the firm’s enterprise technique, he mentioned.
“I contemplate this extra as a prize than a burden,” mentioned Prates. “Who’s the opposite CEO in Brazil that may be with the president of Brazil each 15 days? That resolves plenty of issues.”
Petrobras can be in talks with Mubadala Capital, the funding arm of Abu Dhabi’s sovereign wealth fund, to turn out to be a companion in a refinery that the Brazilian firm offered below earlier administration. Each side may attain an settlement by the top of the 12 months, Prates mentioned. He added that Petrobras’s refineries weren’t designed to compete with one another and that the plant has been struggling because it was offered off.
Mubadala Capital is increasing the Mataripe refinery within the northeastern state of Bahia to provide renewable fuels, a undertaking that pursuits Petrobras. Prates mentioned Petrobras wouldn’t essentially function the refinery, and that it may very well be cut up into a couple of separate firms.
“We want to get into that. They invited us,” Prates mentioned. “We can reincorporate the refinery into the system.”
Most Learn from Bloomberg Businessweek
©2024 Bloomberg L.P.