Petrobras broadens upstream expansion plans

Petrobras broadens upstream expansion plans

Rio de Janeiro, 23 May (Argus) — Brazil's state-controlled Petrobras is moving away from the cost-cutting philosophy that shaped its investment outlook for the past five years, in a response to higher crude prices and lower debt levels.

Amid a barrage of attacks from Brazil's political class, the company has retained its composure while defending its market-based fuel-pricing policy and rolling out news of major upstream changes. Brazilian president Jair Bolsonaro's hunt for a convenient culprit for high fuel prices recently cost former mines and energy minister Bento Albuquerque his job but, so far, does not appear to have moved Petrobras away from its more realistic investment strategy.

The company's $8.6bn first-quarter profit, bolstered by higher Brent prices and improved operational efficiency, should have been a reason for applause from Petrobras' controlling shareholder, the federal government. It was instead likened to "rape" by Bolsonaro, who is facing voter backlash over high prices at the pump ahead of a presidential election in October. Petrobras insists that the profit was driven by demand for pre-salt crude and not meaty margins on fuel sales, and that the government reaps the benefits of its market-based fuel pricing in the form of taxes and dividends — an