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Petrobras Plans Dividend Squeeze To Fund Transition to Renewables

Petrobras Plans Dividend Squeeze To Fund Transition to Renewables

Brazil’s state-owned energy heavyweight Petrobras…

Petrobras To Start Expanding Into Wind and Solar This Year

Brazil’s state oil major Petrobras is this year set to go on a shopping spree in wind and solar, its chief executive told Reuters this week.

The company aims to build a portfolio of stakes in wind and solar projects to the tune of 2 GW, Jean Paul Prates told the news outlet in an interview.

"The market will see that the transition will be carried out in a firm and responsible way and will recognize this," Prates said, noting that the acquisitions should boost Petrobras’s share prices.

The Brazilian state company’s management also has solid ambitions in offshore wind, the report suggested, citing Petrobras’s chief executive as saying the company was looking forward to the finalization of a regulatory framework for that segment of the alternative energy industry.

"We will practically reign alone in this market," Prates said. "This is our big bet," Prates told Reuters.

Petrobras plans to invest $3.7 billion in the decarbonization of its operations by 2027. It also plans to spend some $5.2 billion on expanding into wind and solar.

Some observers, however, are worried that the decision is politically rather than economically motivated and this would backfire.

"My fear is that Petrobras will return to investing based on the political rate of return and not the economic rate of return," Adriano Peres, director at consultancy CBIE, told Reuters, referencing previous acquisition decisions by the company that had been motivated by political reasons rather than economic ones and had ended badly for Petrobras.

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Yet the amount of investment allocated for wind and solar pales in comparison with what Petrobras wants to spend on its core business. In November last year, the company announced it had budgeted $102 billion for the five years to 2028, of which 72% would go into oil and gas exploration and production.

By Irina Slav for Oilprice.com

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