Petrobras releases five-year strategy plan

Brazilian national oil company Petrobras today announced approval of its business plan for 2009-2013, shedding light on key details of how much the company plans to spend and where in the years ahead.

Offshore staff

HOUSTON -- Brazilian national oil company Petrobras today announced approval of its business plan for 2009-2013, shedding light on key details of how much the company plans to spend and where in the years ahead.

The plan had been on hold since late 2008, and was revised and updated to take into account the changes in the international macroeconomic scenario and its impacts on oil and oil products markets.

The plan incorporates the investment required for the exploration and development of the oil discoveries in the presalt area.

The plan established the following oil production targets in Brazil: 2.68 MMb/d of oil in 2013, 3.34 MMb/d in 2015 and 3.92 MMb/d in 2020.

In addition to the Tupi Pilot System, scheduled to begin production in 2010, three systems are to go into production in the presalt layer of the Santos basin during 2009-2013: Tupi 1 and Guará 1 in 2012 and Iara 1 in 2013. The 2015 target in the 2008-12 Business Plan of 2.8 MMb/d of oil has been increased by 528,000 b/d as a result of these additional production projects.

Including natural gas production, domestic output will reach 3.31 MMboe/d in 2013, 4.14 MMboe/d in 2015 (685,000 boe/d more than for the 2008-12 Business Plan) and 5.1 MMboe/d in 2020.

Targets for the international business also reflect the company's integrated growth and the production of oil and gas is projected to reach 340,000 boe/d in 2013. The projected combined output of oil and gas in Brazil and overseas for 2013 is 3.651 MMboe/d.

The plan, which for the first time includes investments in the presalt area in Santos basin, envisages total investments of $174.4 billion to 2013. This represents an annual average of $34.9 billion, 90% of which ($157.3 billion) in Brazil and 10% ($16.8 billion) abroad and 55% more than the previous plan.

In comparison with the Business Plan 2008-12, the most significant increase was in Exploration and Production, with a growth of 71% in investments equivalent to $92 billion, or 53% of the $174.4 billion for the 2009-13 period. In the International segment, investments are to continue to be concentrated in Exploration and Production with a focus on Latin America, West Africa, and the Gulf of Mexico.

Exploration and Production accounts for 76.4% of the total $47.9 billion allocated to new projects or equivalent to $36.6 billion. For the first time, the company is dedicating significant efforts to evaluate, develop, and produce discoveries in the so-called presalt layer of the Santos and Espírito Santos basins. Of the new projects in the E&P segment, about $28 billion relate to presalt development.

Despite the current financial conditions, potential impacts in the short-term oil demand, over the long-term, the supply of oil still is expected to be lower than the demand due to depletion in the existing production fields. Petrobras uses the average Brent price assumption of $42 bbl for its analysis of financiability, leverage targets, and rates of return. The plan also contemplates the analysis of the world production growth, exchange rate and oil and oil products price assumptions.

01/26/2009

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