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Petrobras must play its part in emissions reduction efforts
Despite the global energy transition effort, Brazil’s Petrobras has yet to move into renewable energy due to lack of expertise, reports GlobalData. However, as a leading oil and gas company in the country, it needs to play its part by investing in less capital-intensive sustainability efforts to reduce emissions, says the consultancy.
Petrobras has set a target of reducing total operational greenhouse gas (GHG) emissions by 25% by 2030. Its sustainability efforts include launching 10 commitments to minimise GHG emissions, increasing carbon capture and water reutilisation, continuing to invest in reducing Scope 3 emissions and finding new energy alternatives.
Steven Ho, Upstream Oil & Gas Analyst at GlobalData, comments: ‘Petrobras very much remains bullish in global demand for oil and gas, along with many of its US counterparts. During rosy times, the company invested heavily in many oil and gas fields, resulting in a substantial load of debt. Therefore, the company’s current priority is to leverage on its expertise and increase production from its core assets such as the Buzios pre-salt field, while reducing its operational cost to be able to sustain through a lower Brent price given the current volatility.’
Petrobras also plans to ramp up its natural gas production to become a net exporter in the future. The company recently entered a partnership with Golar Power for the development of an LNG distribution business, which displays Petrobras’ intention to expand into the LNG fuel domestic market. In addition, the company is looking to diversify into LNG liquefaction plant in 2025. Incorporating more natural gas and LNG into its production mix will indirectly support Petrobras’ sustainability effort due to the nature of the cleaner fuel which has lower carbon emissions, notes GlobalData.
Ho adds: ‘Renewable energy projects are capital-intensive and may have longer pay out and are, therefore, deemed unsuited in Petrobras’ vision given its effort to conserve cash to repay debt in the shortest time possible. In fact, the company has recently divested of a wind farm, Eolica Mangue Seco 2. Therefore, the company has to rely heavily on its current initiative to reduce flaring and carbon capture projects to ultimately achieve its sustainability commitments.’