BY SAMANTHA PEARSON
AND LUCIANA MAGALHAES
SÃO PAULO—Brazil’s statecontrolled oil company, Petrobras, said it would invest $102
billion before the end of 2028 as
Latin America’s biggest nation
positions itself to become one
of the world’s major oil powers.
“Someone has to produce
oil, right?” the company’s chief executive, Jean
Paul Prates, said on Friday.
The investment plan, unveiled late Thursday by Prates,
is 31% more than the $78 billion Petrobras had announced
in its previous five-year plan
for the 2023-2027 period.
More than 70% of the outlay
will be spent on production
and exploration, the plan said.
As the world’s major economies invest heavily in clean energy, weaning themselves off
fossil fuels, Brazil has thrown
ever more money behind oil
production, tapping deep water
reserves off the coast of Rio de
Janeiro and eyeing potentially
vast new deposits near the
mouth of the Amazon River.
“Just because we’ve
reached the conclusion that
the world needs clean energy
and increasingly more of it,”
Prates said, “it doesn’t mean
that we should condemn oil
and stop pumping overnight.”
If it weren’t for oil profit,
Prates said, Petrobras
wouldn’t be able to invest in
renewable energy.
With output cuts by Saudi
Arabia and Russia, Brazil is set
to be one of the top three
sources of global oil-production
growth this year, alongside the
U.S. and Iran, said the International Energy Agency, a Parisbased group of some of the
world’s biggest energy users.
Brazil is the world’s ninthbiggest oil producer and Latin
America’s largest by far. It
posted record oil-and-gas production in September of 4.7
million barrels of oil equivalent a day, more than twice as
much as Mexico. Of that, 3.7 million barrels was crude oil,
equivalent to more than a
quarter of U.S. production and
17% more than the same
month a year earlier, oil regulator ANP said.
“Petrobras has an absurdly
high capability to generate
cash,” said Pedro Galdi, an investment analyst at Mirae Asset Brasil, a São Paulo-based
brokerage firm.
The problem with Petrobras
isn’t cash flow or technical
know-how, Galdi said. “The big
concern is politics,” he said,
citing fears that President Luiz
Inácio Lula da Silva, who took
office in January, could seek
greater influence over how Brazil’s biggest company is run.
Between 2011 and 2016, under the Workers’ Party, Petrobras incurred a loss of about
$30 billion after the government forced the company to
fund gasoline and diesel subsidies to fight inflation. By 2015,
Petrobras had become the most
indebted oil major in the world,
owing $130 billion to creditors.
Politicians also used the
company as a piggy bank for
decades, taking bribes in exchange for contracts, prosecutors learned as they investigated the sprawling Car Wash
corruption scandal. The affair,
uncovered in 2014, ensnared
dozens of Brazil’s most powerful businessmen. It also
landed da Silva in jail in April
2018 for 19 months, before his
convictions were annulled.
Prates said he had suffered
no pressure from da Silva to
lower prices and didn’t expect
to do so. “Lula never asked me
directly—or indirectly—to interfere with prices,” said
Prates—using a shortened version of the president’s name—
who is a member of the Workers’ Party.
Governance changes after
the scandal have helped “bulletproof” Petrobras against
the errors of the past, said
Carolina Chimenti, a senior
analyst at Moody’s Investors
Service in São Paulo.