<article><p class="lead">Brazil's state-controlled Petrobras expects average crude exports to double in 2021-25 to 891,000 b/d from the 2015-19 average of 445,000 b/d, reflecting refinery sales, Chinese demand and the development of new markets for its rising pre-salt production. </p><p>Average domestic crude sales will drop to around 1.252mn b/d in the 2021-25 period from the 2015-19 average of 1.348mn b/d, Petrobras said today during a presentation detailing its latest <a href="https://www2.argusmedia.com/en/news/2163634-petrobras-rolls-out-leaner-greener-spending-plan?backToResults=true">five-year business plan</a> that was released last week.</p><p>Petrobras plans to sell around half of its 2.2mn b/d of domestic refining capacity next year. "For the purposes of the 2021-25 plan, we made a somewhat conservative decision and assumed that refinery buyers will purchase a relevant part of the oil for their refineries from other sources. So a portion of the volume currently allocated to our own refineries may be redirected for export," logistics director Andre Chiarini said. </p><p>The company has enough capacity between its own export infrastructure, operated by subsidiary Transpetro, and third-party ship-to-ship services to handle the increase in outflows, he added. The logistics division plans to spend around $2.1bn mainly on pipelines and terminals, according to details of the $55bn 2021-25 spending plan. </p><p>Spending on refineries is expected to total around $4bn through 2025, down from $6.1bn under the previous plan. Part of the new spending will go toward boosting the efficiency of the five southeast refineries that Petrobras will retain. </p><h3>Pre-salt at the wheel </h3><p>Refining is among the areas that take a backseat to prolific pre-salt development in the new plan. Petrobras plans to invest around $37.8bn, or 70pc of the $46.5bn earmarked for upstream spending, in pre-salt projects through 2025. Around $4.2bn of that will be spent on pre-salt exploration, down from $7bn under the $75.7bn 2020-24 business plan. Post-salt exploration spending has been cut to $2.33bn under the new plan from a previous $4.5bn. </p><p>Around $1bn of exploration capex will be directed to northern Brazil's equatorial margin, where French partner Total recently bowed out after failing to obtain drilling permits. </p><p>The 600,000 b/d Buzios pre-salt field remains Petrobras' top medium-term development, attracting around 30pc or $16.7bn of total spending under the new plan, compared with $17.9bn under the previous plan. </p><p>The field is forecast to reach 2mn b/d of 28°API crude through 12 floating production, storage and offloading units (FPSOs) by 2030, up from a current four units. </p><p>Around 10pc of Buzios output will flow to Petrobras' Chinese state-owned partners CNOOC and CNPC, which picked up a combined 10pc interest in 2019. Petrobras and the two companies are still negotiating a co-participation agreement covering past development costs at the field. A final agreement was initially expected for year-end, but is now likely only later in 2021, Petrobras upstream director Carlos Alberto Pereira de Oliveira said. </p><p>Petrobras will spend $13bn to revitalize the aging Campos basin, down from $20bn under the previous plan. But the company maintained plans to restore production there to around 1mn b/d of oil equivalent (boe/d) in the medium-term. </p><p>The revised Campos basin target takes into account the 300,000 boe/d that Petrobras will lose from the sale of its interests in the Marlim and Albacora fields. The fields are among hundreds of upstream assets, mostly onshore and shallow-water, that the firm plans to unload under its $25bn-$35bn divestment plan, up from $20bn-$30bn under the previous plan. </p><h3>Challenging break-even </h3><p>Petrobras has established a $35/bl break-even baseline for new upstream investments, a challenging threshold for some post-salt projects. The firm says the prospective break-even for pre-salt projects in the coming years should be around $19/boe, as average lifting costs are estimated to fall by around 11.6pc to $3.8/boe over the 2021-25 period. </p><p>Pre-salt deposits are expected to account for around 80pc of the company's total hydrocarbons production by 2025, when oil output after the planned divestment of around 600,000 boe/d could remain flat at around 2.3mn b/d — though it has the potential to reach as high as 2.7mn b/d. Pre-salt currently accounts for around 65pc of total production. </p><p>Petrobras plans to invest around $17bn in 13 offshore platforms through 2025, 11 in pre-salt and two others slated to come on stream in Marlim in 2023. Due on stream in first quarter 2021 is a 180,000 b/d platform in the Sepia pre-salt field, and a 180,000 b/d definitive platform at the Mero field in fourth quarter 2021.</p><p class="bylines">By Nathan Walters</p></article>
