Opinion: Petrobras Is Right to Divest Its Businesses in the Northeast and Other Non-Profitable Assets

Written by Paulo Nogueira

Published on 27/08/2020 at 11:14

Principais ativos da Petrobras no Nordeste

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With The Risk of Decreased Oil Demand and Falling Prices, Even Petrobras’ Operations in The Pre-Salt Could Be Made Invable by The High Cost of Low-Productivity Wells

By Luiz Henrique, August 27, 2020 – Petrobras is selling some assets. It needs to raise capital after enduring so much theft and mismanagement in the past, which means it still has a huge debt (it was once the largest for a company in the world), making the cost of raising resources in the financial market very high.

For this reason, Petrobras decided to sell all its assets in Rio Grande do Norte, in an official statement to the press this week. Both in RN and in most of its operations in the northeast, the wells are of low productivity and would not generate enough resources to maintain the new business model.

Without resources, Petrobras will not be able to continue extracting so much oil from the pre-salt and we run the risk, with oil demand falling in the coming years, that prices fall and make offshore extraction unfeasible.

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Prioritizing the pre-salt, small plants and wells are lacking investments and are at risk of becoming unfeasible. Moreover, a giant like Petrobras does not have a compatible structure to operate small businesses, so the best solution is to sell to someone who has the expertise and compatible cost structure. It would be like “Carrefour operating small shops”.

However, some state governments are against this, and it remains to be seen why they prefer the risk of closure. On the Twitter of the Governor of RN, Fátima Bezerra (PT), she expresses indignation and concern about the socio-economic situation of the state, especially for not having been consulted in advance.

I believe that the power to appoint allies to commissioned positions in state-owned companies, in addition to appointing service providers, notably contractors, as we saw in the Lava-Jato, weighs in the opinion of some politicians, despite knowing people who, due to ideology, believe in the state as a businessman.

By Luiz Henrique Sanches

Opinion: Petrobras Is Right to Divest Its Businesses in the Northeast and Other Non-Profitable Assets

With The Risk of Decreased Oil Demand and Falling Prices, Even Petrobras’ Operations in The Pre-Salt Could Be Made Invable by The High Cost of Low-Productivity Wells

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