Petrobras Switches Gears on Production Cuts

According to recent updates from Brazil’s Petrobras, the negative effects of the latest global recession did not substantially impact production and sales for the company in 1Q20.

Its average production of oil, NGL and natural gas was 2,909 kboed, resulting in a commercial production of 2,606 kboed and oil production of 2,320 kbpd. Compared with the same period in 2019, this is up 14.6% in total production, 13.3% in commercial production and 17.7% in oil production, due to the ramp-up of the platforms that started-up in 2018 and 2019.

Initially, in response to the slump in oil demand and fuels, the company elected to cut its oil production in April to 2.07 MMbpd and its refineries’ utilization factor from 79% to 60% while concentrating on oil, diesel and fuel oil exports.

However, “with the better than expected evolution of demand for our products, we opted for the gradual return to an average oil production level of 2.26 MMbpd in April alongside an increase in the utilization factor of our refineries,” the company said in a written statement.

“Oil has been and will be essential for the functioning of the modern economy for a long time. We are strongly committed to promoting Petrobras' resilience to the global scenario that is extremely hostile to the oil industry. Despite the enormous challenges, we are confident that with the dedication and talent of our employees we will achieve this goal. The lessons learned in this crisis will contribute to transforming us into a stronger and more value-generating company,” said Roberto Castello Branco, CEO.

In 1Q20 the company saw average production of oil products at 1,836 kbpd, exceeding 4Q19 production by 2.4%. The production of low sulfur bunker and fuel oil stood out, maintaining its appreciation in the international market and in line with IMO 2020 specifications, according to the company.

“We started 2020 fully supplying the market, with the required quality, constantly capturing export opportunities, especially in the Asian market. The production of fuel oil, especially bunker streams and low sulfur fuel oil, reached an average of 295 kbpd, a meaningful increase of 18.5% in relation to 4Q19 production,” Branco said.   

The company continues to direct its efforts towards exporting its oil and oil products and plans to launch a series of initiatives that expand export capacity.

“Although there is a drop in global demand, the competitive advantage of our products, the gradual resumption of China, a strong trading partner, and the constant search for new markets for our products, bring the expectation that we will continue to perform well in our exports,” Branco concluded.

To contact the author, email bertie.taylor@rigzone.com.