Petrobras, Brazil’s oil company, has announced a long-awaited plan to invest $224.7bn over the next five years following months of battling with the government over cost-cutting.
The Rio de Janeiro-based company is gearing up to exploit vast offshore oil reserves which could turn the country into one of the world’s biggest energy exporters. However, the government, which has been under pressure to reduce spending and control inflation, has recently put pressure on Petrobras to rein in its ambitious investments.
It still ranks among the world’s biggest corporate investment programmes, but the 2011-15 budget announced on Friday is only $700m bigger than the previous plan and significantly below some previous estimates.
Under the programme, 95 per cent of investments by the company will be in Brazil, leaving $11.2bn for investment abroad.
“Of total investments, 57 per cent has already been authorised for execution,” the company said.
The company said it was shrinking its proposed investment budget for this year to R$84.7bn from a previously planned R$93bn. However, even with this adjustment, the proposed investment would still represent an increase of 11 per cent compared with last year’s realised investment of R$76.4bn.
Petrobras said much of the investment was aimed at developing its large ‘pre-salt’ discoveries, which lie under a two-kilometre layer of salt in deep water off the southeast coast.
“The participation of the pre-salt [fields] in national oil production will rise from an estimated 2 per cent in 2011 to 40.5 per cent in 2020,” the company said.