Petróleo Brasileiro S.A. - Petrobras Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 12, 2023

There are 10 speakers on the call.

Operator

Hi, good afternoon, everyone. Welcome to Petrobras' webcast with analysts and investors about the Q1 2023 results. Great to have you join us today. I'd like to inform you that all participants will follow the transmission by Internet as listeners. After an introduction, a Q and A session will begin.

Operator

You can send us questions by email at petroinvestipetrobras.com.br. Today, we have with us Ana Paula Zetel, Upstream Executive Manager representing the Chief Exploration and Production Mr. Joao Zomendes Carlos Travazos, Chief Engineering Technology and Innovation Officer Clarisse Coppetto, Chief Corporate Affairs Officer Claudio Filosier, Chief Logistics, Commercialization and Markets Officer Mario Speneb, Chief Governance and Compliance Officer Mauriz Tomashchin, Chief Energy Transition and Sustainability Officer Andrew Kaietam Leite, Chief Financial and Investor Relations Officer and William Ferranto, Chief Industrial Process and Product Officer. To begin, we will watch a message from our CEO, Jean Paul Prat.

Speaker 1

Dear investors, As we open this event to discuss our results, I believe it is of the utmost importance to talk about the future of Petrobras And the perspectives opened up by yet another quarter of solid operational and financial performance, The first under this new management team. In these first 100 days, we focused our efforts On reorganizing the company's structure, preparing Petrobras for the future, especially to lead the just energy transition. We continue to reach production records in the presalt and to increase the efficiency of our refineries. Our operating cash generation remains consistent, and our debt reached the lowest level since 2010. We have solid fundamentals, which underpin our plan to diversify our investments To strengthen Petrobras as an integrated, robust and long living energy company, we will always pursue returns on investments And reductions in the cost of capital, maximizing the company's value and seeking to develop the Brazilian market With sustainability, total attention to people is our nonnegotiable priority because only a skilled and diverse Technical staff will allow us to meet the dynamic demands of the market, especially the energy transition.

Speaker 1

The investment in profitable exploration and production assets and in adjusting the refining facilities to the Brazilian market Demands are natural movements to ensure the energy supply that society needs. We will continue our efforts To decarbonize our production processes and to develop greener products, which we understand to be the only way looking forward For the oil and gas industry, reducing its emissions and consolidating clean energy alternatives. In fact, We are convinced that Brazil and Petrobras have all the conditions to be global leaders in a fair energy transition Without ceasing to be an oil power, establishing partnerships with other companies and taking advantage of the different vocations and potentialities of all Brazil's regions. We will build this route alongside our partners. This is our path going forward.

Speaker 1

We make decisions always reconciling our social function and respect for our governance, honoring the trust Thank you very much to all of you.

Operator

Thank you. Now I would like to pass the floor to Petrobras' CFO, Sergio Caetanolet, that will begin our webcast presentations of the Q1 2023 results. Please, Sergio, go ahead.

Speaker 2

Hello, everyone. Good morning. I'm very happy to be here with you today in my Q1 results webcast And even happier to talk about the important and solid performance that Petrobras delivered in the Q1 of 2023. We had very strong quarter from an operational and financial perspective, and I will take a moment to highlight several important deliveries. First, from an operational angle, pre salt production set a new monthly record in February 2023 in a quarterly record reaching 77% of our total production.

Speaker 2

In February, we also had a monthly production record at the FPSO Granabara in the Marrow field, whose average oil production reached 179,000 barrels per day. We made the first injection of gas at P71, which continued its ramp up in the Itau field in Santos Bay results. The production of diesel, gasoline and jet fuel in the Q1 of 2023 reached 67% of total production, 1 percentage point higher than the Q1 of 2022. We also set production records for 10 PPM diesel at Ripa and Rigapi refineries in January And the Hepland refinery in March. We advanced in development of more sustainable and efficient Products with the certification of diesel at the hip park, the launch of new premium gasoline, the exclusive commercialization of Fuel oil with a maximum 1% sulfur content in the domestic market and with the beginning of trading of Ultra low sulfur marine gas oil.

Speaker 2

Here, it's important to point out that we have recently undergone The organization adjustment to prepare the company for the future by creating the Energy Transition and Sustainability Executive Officer. In the Merge, we carry out the remaining procurement to resume the works of the natural gas processing needs Of the integrated Project Health 3 in the GasLog cluster in Tabare, which is strategic for the new natural gas Flow from the Santos base. Move over the financials. I would like to highlight our EBITDA, which reached around $40,000,000,000 a very robust amount for 4th highest Petrobras history. We had consistent operating cash generation, with cash flow from our operations reaching The solid mark of $10,300,000,000 The net debt to EBITDA ratio reached its best mark since 2010.

Speaker 2

It's also important to highlight that we had the lowest level of gross debt since 2010, reaching $53,300,000,000 Return on capital employed reached 15.7%, the same level as in Q4 of 2022. And our net income reached $7,300,000,000 and the free cash flow was around $8,000,000,000 which are very significant levels. We continue with commitment to generate value and financial sustainability by distributing Results to society. As can be seen in our fiscal report, in the Q1 of 2023, We paid BRL 63,000,000,000 in tax and government take. We also paid EUR 4,200,000,000 in dividends, bringing our cash levels to $15,800,000,000 In terms of the external environment, in the quarter, we had 8% drop in Brent prices, and the average exchange rate Went down 1% when compared to the Q4 of 2022.

Speaker 2

Next slide. As already mentioned, we had very robust EBITDA. Recruiting EBITDA In the Q1 of 2023 reached 14,300,000,000 Dollars, in line with the Q1 of 2022, despite the 8% of devaluation of Brent, mainly explained by lower exploration And legal contingencies. Next slide. Delving to the results By business segment, in exploration and production, the impact of the Brent devaluation was partially offset by lower expenses and higher productions, causing the segment's EBITDA to decline 1% when compared to Q4 of 2022.

Speaker 2

In the Downstream segment, EBITDA was 15%, lower than the previous quarter, due mainly to the effect of inventory turnover with reduction of Brent between the quarters. When we look at the replacement cost, The results for the quarter grew 3%, reflecting higher margins in oil products, Main gasoline due to depreciation of the international margins. In Gasoline Power, EV Star rose 16% due to the favorable scenario and the actions take to building a commercial As mentioned earlier, the resources generated by operating activities and free cash flow with very significant levels. The level of cash flow generation, together with the inflow of resources From divestments, we are used to enumerate shareholders, make investments, prepay debt and amortize the principal and interest during the period and amortizing leasing liabilities. Next slide.

Speaker 2

When you look at our debt position, we have a very comfortable debt profile In terms of liquidity and financial strength, at the end of the Q1 of 2023, gross debt reached $53,300,000,000 as already stated. That's the lowest level since 2010. Net debt was $37,600,000,000 a drop of 9.5% compared to year end 2022. Our Cash position remained quite robust, reaching EUR 15,800,000,000 at the end of the first quarter. In addition, it's worth noting that we have available revolving credit lines of $9,000,000,000 We closed the quarter with an average funding rate of 6.5% per year And on average maturity of 12 years.

Speaker 2

Next slide. In relation to portfolio management, We are reassessing the process in which no contracts were signed. It's important to emphasize that the projects that have already been signed, which are in current closing stage, shall be honored by the company. April Up to April 2023, cash inflows related to these divestments totaled $2,100,000,000 In the Q1 of 2023, net income was $7,300,000,000 compared to $8,200,000,000 in the Q1 of 2022. This result This is mainly explained by the pre devaluation and lower financial results, partially offset by the lower operation Expenses.

Speaker 2

In the addition, there was a higher income tax expense, which was mainly due to the absence of Tax credit in the Q1 of 2022 because of the dividend distribution for fiscal year 2020 to add interest on equity. In this Q1 of 2023, Tax and government take to federal, state and municipal governments amount to BRL 63,000,000,000, We present the return to society of 54% of the company operating cash generation. I finish here my presentation. Please, we can move forward.

Operator

Thank you, Sergio. Now I'll pass the floor to Chief Energy Transition and Sustainability Officer, Mauricio Tommaschino. Please, Tomajim, go ahead.

Speaker 3

Hi, good afternoon. It's with a great That I'm here today as the 1st chief energy transition and sustainability offers In Petrobras' history, to present to the market the excellent results obtained of the Q1 Of 'twenty three. Please, next slide. As we can see in the graphs, We remain aligned with our sustainability commitments with carbon intensity levels below 2022, the carbon intensity in our exploration and production operation reached 14.7 kilograms of CO2 by barrel in the Q1 of 'twenty three is the first graph. This level is lower than that achieved in 2022 and is the result of our continuous effort to reduce emissions from our operations.

Speaker 3

We have Reinforced the competitive business of pre salt oil fields, which represents an increasingly Relevant percentage of the company's total production. Why this is important? This is important because The initial intensity from the pre salt field is lower than the other fields. For example, if we look to P and Bouzios fields, Both have emissions of 10.6 and 9.3 per barrel, respectively. So this figures are well below the national and international emission intensity.

Speaker 3

When we look to the next graph at the refining indicator, we can see A continuous reduction in Carlos' intensity tool. This improvement is associated with Increased energy efficiency through, for instance, the reduction of gas sent to the torque And process optimization. Finally, look at the 3rd graph. In the first graph, I would like to highlight the decrease in carbon intensity from Thermal power generation. There are two explanations For this reduction in the carbon intensity, first, the improvement of the thermal power plant itself And second, the reduction of the dispatch of thermal power plants, reducing the dispatch of the less efficient plant.

Speaker 3

Next slide, please. So now let's take a look to the absolute emissions. In terms of absolute emissions, There was also a good performance. There was an important reduction of total operational emissions Between 2022 and the Q1 of 'twenty three, the same happened regarding the operational Emission from oil and gas, as you can see in the other graph. In what concerns the total emission, There are 2 main explanations for the initial reductions.

Speaker 3

1st, the improvement in our process And second, the reduction of thermal power plants dispatch. Just slide 4th slide, please. In the 4 slides, I would like to highlight in the slide three aspects related to climate and Decarbonization. The first point to be highlighted is related to the climate supplement. In the period, we released the new additions of the climate supplement with information About progress made in decarbonization pathway, the carbon neutral program and other decarbonization Initiatives.

Speaker 3

The documented details, information regarding Missions' performance In 2022, the projects already implemented can be defined also in this report. It presents also company's strategy risks And governments about the challenge of climate change. We detailed the document our actions To reduce methane emission, output deposition on just transition and the strategy to use Carbon Credit. I invited all to read this document. The second point that I I want to highlight is that in the period, we made some important partnership to leverage new business And the carbonization opportunities.

Speaker 3

And finally, the third point to highlight concerns our Supply Chain, we are referenced in sustainability by CDP, Indicate our commitment to encourage good environment practices and climate change mitigation measures when Dealing with our supply chain. Finally, in the last slide, please. In the last slide, we are going to focus on the Gas and Energy segment. The performance of the period in the period was quite robust. It is The result of actions to build a commercial portfolio resilience to business risk, that explains This good performance.

Speaker 3

Petrobras continues working to meet its contractor commitments for The sale of gas in this quarter, it's achieved 100% Delivery to reliability. In the Q1 of 2023, The petroised natural gas market remained at the same level of the Q4 of 'twenty two. However, compared to the Q1 of 2022, there was a decrease of 16,000,000 Kubecimeters Pay Days. 2 factors explain this drop. The first It's the opening of the natural gas market in the country.

Speaker 3

And as consequence, The increase in the participation of other agent that used to that produce rice and used to sell it to Petrobras that are now selling to the market directly. Another factor that's playing this Reduction of the market was the lower term electric consumption, given the The recovery of reservoir levels in April, the levels of the reservoir ended At 88%, a very high level in the power sector Brazilian power sector, Easter. The lower telemarket dispatch partially displaying the excellent result of This follow-up in this first quarter. Why that? Because the drop of ThermoLog ThermoLog ThermoLogic dispatch Made that less LNG was imported at a time when The fuel is very expensive in the international market.

Speaker 3

So the lower dispatch Of thermal power plant at this moment, where the natural gas price is very high In the world, it was very good for Petrobras result. It was Also mention regarding the relationship with the long term market of Gaia's distributor, Commercial action to solve disputes that arose in the recent past And the signing of new contracts with an extension of sales portfolio. That was I had to say now. Thank you very much.

Operator

Thank you, Tomas King. Now we'll continue with Carlos Travancos, Chief Engineering Technology and Innovation Officer, to present the E and P results.

Speaker 4

Thank you very much, Carla. Good afternoon, everyone. I'm Carlos Vasos, Engineering Technology Innovison Chief Officer. Today, I will present both the results of exploration and production and engineering technology and innovation. Joao Sommendi was underwent a minor surgery and he will not be able to be here with us.

Speaker 4

He's fine. And by next week, He's going to be back. Well, we can start with the next slide. So you can see here that we have reached 2 percent growth on the operated production in comparison with the Q1 2022. We achieved EUR 3.7 €4,000,000,000 a day, what I mean with peers are talking about equivalent digits here, yes?

Speaker 4

So we can see A growth comparing with the last quarter of 2022 and then also 2.3% if we compare with the Q1 of the last year as well. If you take a look in oil and gas In our outproduction, again, we have a growth of compared with the last quarter. This growth It was mainly due to ramp up of P71 and for entry of 8 wells on Campus Basin And also improvement in our efficiency. Going to the right, if you take a look in pre salt, our own production And we can see that increasing of the share of result on our total production. Yes, we achieved in this quarter 77% of Cristal Production as a share of our total production.

Speaker 4

Now we can go to the next, please. And now we're talking about some achievements, important achievements. We actually we have broken some records. We broke in a monthly record 2,213,000,000 barrels a day that was taking place in February. And actually, a quarterly record with 2,050,000 speris.

Speaker 4

And if you take a look in individual production as well, we have Amazing results with Granabar FBSCO 179,000 barrels a day, What means 100% efficiency that was achieved on February. The last time that we have the record It was in November with Carioca, so that means that we just broken our own record. We can go to the next, please. Now let's talk about costs. Yes, now I'm showing a little bit about our lifting costs in Brazil.

Speaker 4

Just to understand this picture, we segregating in 3 layers, yes? So the yellow one is Onshore and Shallow Waters, that will reduce our costs from EUR 18.8 billion in the last quarter of last year to EUR 14,700,000,000. This major related some portfolio movements that we have done. And then we also had results of lifting costs on deepwater, basically in campus pacing, but not only campus pacing, But basically there, when we have here, we can see a drop as well of the cost, mainly due to the wells that we put in Production and of the presales as well have a good result pending due to run part of P721. Yes.

Speaker 4

That's so those results bring us a drop of car lifting costs From EUR 6.1 billion to EUR 5.5 billion, yes? Now showing a little bit about total cost of oil production, yes? So If you take a look in the last quarter of 2022, that was 38%, and we have a reduction of 11% on debt costs. So here, we include depreciation, depletion, amortization and the government take is considered here and of course, the lifting costs. Yes, of Of course, it's important to highlight that here we must include for to have a view of the total cost.

Speaker 4

We are not including that numbers Those numbers, the investments is not here, yes, and the capital cost is not here as well. We can go to the next, please. Oh, yes. Now talking about our exploration, We achieved a discovery in 2021 and we are now we have Started the extension well drilling on Aran Block Curacao, yes? So this is the first drilling that we are doing, the first well, yes?

Speaker 4

We have 6 more to be done and to declare as a commercial one. Okay. I think this is the last one for Exploration Production now, I'll start talking about Engineering Technology and Innovation. You can go to the next, please. Okay.

Speaker 4

Here you have a picture of Aneneri. Actually, this unit, we just Start production in an area yesterday and I to connect the second well on that unit, reminding you that it's part Of Marlin's utilization program, yes? The Marlin's utilization, you can go to the next, please. In Marlin's utilization, We are going to remove 9 units, yes? We're going to replace by 2 units, Ananeri and Anitagari pouch.

Speaker 4

Ananeli, we have start production. Like you said, Genitagari Paojis, we are in the mooding at this moment, yes? Actually, now if you take a look in our strategic plan, 23, 27, From these 18 units, we have 4 and final locations, PACE51, that's already in production that we anticipated. And Anneri now is in production as well. And Anitta Garibaldi, that is in moving process.

Speaker 4

And we also have Amira de Parozu that is ready to start production, waiting for authorization. Coming back to the revitalization, that's So fantastic program. And then we intend to increase 20% in our production and reduce 6% of Greenhouse Gas. And this is a progress. All the time, they're Talking about production systems, they're used to show the units, but it's important to remind that we have a Subsea Working in a very hard to see, working especially when talking about revitalization when we're going to build 14 new wells And relocate 61.

Speaker 4

So in these kind of projects, we have a special feature that we also have To remove some lines here and there that's required for us synchronization and a very good planning to do. Now we can go to the next, please. Okay. Talking about updating our digital start up schedule for 2023, 20 20 Sven, I think all of you are very familiar with this picture, yes? That's the 18 units that we are going to start Operation and the strategic planning, we have made some shifts with PUBGIS 7, IPB, just highlighting that we're talking about despite that is changing the year, we're talking about Minor shift is not big and there is no impact on our production curve.

Speaker 4

In this slide, you can also can see the picture of the 78 for boozu unit for boozu that is in Zander construction. Now you can go to the next. Oh yes, talking about downstream, yes, we're having a Very important achievement in this quarter that we signed the contract to restart our process gas units in Taboray, Yes, it will be, yes. So that was an interrupted next year and we got putting back Again, in the fantastic time, in 6 months' time, now we have to hold the contract, sign it. And actually, the people mobilized on-site, yes?

Speaker 4

So we keep the planning to start operation 2024. And another important achievement is the contract extension Of Train 1 of Genes, so in Train 1, we are actually going to spend from 115,000 barrels a day to 130,000 barrels a day. And the completion of this work is scheduled For 202024. And just another information, probably most of you know, we have already construction The Air emission removed from Unity is the construction is in progress in Air and Air as well. Well, that's what I have for today.

Operator

Thank you, Travancos. Now I'll pass the floor to William Ferenza, Chief Industrial Process and Product Officer. We can go ahead.

Speaker 5

Okay. Good afternoon for everyone. It's our pleasure to stay here and to present the highlights of Refining segment in the Q1 of 'twenty three, and I'm so happy to be in charge of our refiners in our Gas plans. In the Q1 of 'twenty three, I'm sorry, we are going to prioritize To indicate in this presentation, okay, utilization factor, now refinance and operational availability. In the Q1, the utilization of FETs in our refineries was 85%.

Speaker 5

We think that It's an important and excellent result considering that we had 3 big turnarounds During this period, in HVAP and I PBC, we spent almost BRL 1,200,000,000 by maintaining more than 800 large equipments Like the changes, pipelines, pumps, towers and reactors. And We have more than 10,000 collaborators contributed and performed in this big challenge, Helping us. In April, we had our traditional factor of 29 Percent in the beginning of May, we are performing above 90%. Regarding the operational availability, in the Q1 of 'twenty three, We obtained a result above 96%, With most of our refiners achieving the level of the best refiners, including the companies of

Operator

Thank you, William. Now I'll call Claudio Schlosser, Chief Logistics, Commercialization and Market Officer. Joao Ce, go ahead.

Speaker 6

Yes, thank you. Hello, everybody. It's a pleasure to be here with you today to talk about our Q1 2018 results. Next slide, please. This slide will talk about oil product sales.

Speaker 6

As you can see, there was a reduction in sales Of oil products in the domestic market, up 5% compared with the previous quarter. This was already expected since diesel and gasoline seasonally have a weaker consumption in the Q1 of the year. It is important to say that in this quarterly comparison, there is still the impact of divesting of every month that occurred at the end of the last year. Even so, it is important to highlight that gasoline sales were The highest registered for the Q1 in the last 6 years, driven by the greater competitiveness of gasoline In relation to Equinor, regarding the foreign markets, the drop of fuel export was caused by lower We should do this scheduled shutdowns of some of our biggest refineries, as she mentioned by Director Wiegand. To conclude the topic of the product sales, I would like to take the opportunity to reinforce our focus on the market.

Speaker 6

The term market has even become part of the name of this world. That's why I want to highlight the start up of the new Diesel and gasoline sales center in Rondeau Napoli, Smartadros de Suez. This action strengthens our presence In the Midwest, it enables the frequency of a specific commercial action in the region. This is a very Important milestones that guarantees Petrobras' business in the region that should grow the most in the coming years. Next slide.

Speaker 6

We will talk about our outlook for growth flow. As you can see in the slide, Talking about products, of course, our main destination remains China. However, it is important to announce That we continue to work constantly to seek global opportunities and to develop our new brands, which generated more value for Petrobras in addition of diversifying the client portfolio. Another key action is the market development for other oil streams such as Suru, Mero And Atapur, the cruises and to be the screens are already well known in the international market with guarantees the embedded liquidity and pricing. Next slide.

Speaker 6

Finally, I present the highlights of the quarter that reinforce Petrobras' commitment to supplying more Responsible for us, yes, we had our 1st banking filling fuel gas with renewable content With the Darcie rebuild, the ship that is in the picture and is part of the Transcatheter This fuel was formulated with a 10% soil biodiesel, reducing around 7% of the in house gas emissions. Consider the complete life cycle of the field, a big step towards the goal of reducing carbon emissions. During the 40 days of testing, no anomalies were recorded by the Q or operational differences In relation to the mineral background, samples of collected fuel and ship monitoring data are in the final stage of analysis. Another action in the same line was that we started offering The domestic market excluded fuel oil with a maximum sulfur content of 1%, Discontinuing the sale of fuel oil with a maximum supercontainer of 2%. By ensuring that all fuel oil sold by the company in the domestic market has a low sulfur content, we help Consumers in the investor segment to reduce their emissions.

Speaker 6

I also highlight the sales of the new product, The ultra low sulfur marine gas oil. Marine fuel with the maximum sulfur content of 0.1%. The new marine gas oil is produced at the Residencia Bernardo's refinery, Eredivir BDC in Cubatin, Sao Paulo. Previously, the product sold at the port of Santos to Langhar and Caritage Ship Hollis was conventional Petrobrasmaline gas oil, maintaining a maximum supercontainer of 0.5%. By introducing this ultra low sulfur NGO, we started helping ship Superpowers to reduce emissions of the other silicon sulfur oxide, in addition to avoiding fuel in stocks On the way of vessels passing through the sulfur emission control areas, reducing the cost and the time.

Speaker 6

These actions show that we are on the right track in developing clean and fuels and guaranteeing lower emissions, Generating great value for the company, society and the environment. That's the final slides. And the blue deck too, Carla.

Operator

Thank you, Shiloh. Thank you all. We can move to our Q and A session. And the first question that we receive comes from Bruno Marin with Goldman Sachs and it's for Sergio. Sergio, Petrobras CapEx is poised to grow in the next few years under the current and possibly the new strategic plan to be announced.

Operator

What is the comfortable level of cash position the company should target? More, less or in line with the prior management target of $8,000,000,000

Speaker 7

Thank you, Bruno, for your question. I believe that the levels Sorry, Bruno. I believe that the levels set up in the current business are not very prudent. I think we must keep solid parameters in terms of liquidity and leverage. We want to Always keep a robust financial excretory, which allow us to face inevitable down cycles in oil prices.

Speaker 7

Also, we need to be sure that our investments will be self funded with our operational cash flow. Nonetheless, allow me to emphasize that the execution of the new business plan may result in a revision of the current Targets. Thank you, Bruno.

Operator

Thank you, Sergio. The next question comes from Vicente Falanga with Bradesco Bebe and it's for Travazos. Travazos, the company recently announced the delay in the start up of some forms. What was the major cause of that?

Speaker 4

Okay. Thank you very much for your question. That's a very good question. Actually, we have actually, it's a minor adjustment on the schedule despite As we see the shift from 1 year to another year, yes, we are talking about a minor change. And mainly due to some perception of our risk analysis.

Speaker 4

And this perception It's regarding for the supply chain markets, both for topsides and also for SUBC. But just for your information, if you take a look in IPV, that we're talking about 13 days of shift, yes, not too much. Of course, when you see a shift from 1 year to another year, it seems that you're having a big change, yes? But here, we're not talking about a big change. But Petrobras, all the time that we have in a change that some that appears in our business plans, we are very transparent and it is important So our pension related markets, yes, but this change does not bring any impact on our production curve, Thank you very much for your question.

Operator

Thank you, Travazos. The next question comes from Luis Carvalho with UBS, and it's for Thomas Sebastian, we've seen a series of comments regarding the company's focus in the future, particularly with occasion of investments focused on energy transition. Could you list some potential investments options? How fast the investment portfolio could be built? This portfolio could be made through organic investments or potential acquisitions.

Operator

Will the company pursue assets in petrochemicals, renewable power generation, offshore wind, fertilizers, biofuels, fuel distribution, new refiners or some other sector. In your view, is there any target on how much this could represent from future investment plans?

Speaker 3

Thank you very much, Luis. Well, in fact, we are planning to diversify our investment regarding renewables. Let's say, we are talking about daily investing in offshore wind, Green hydrogen, CCUS and other possibilities. We're still doing our strategic plan For the next cycle. So this is a strategic plan that we are be able to understand, to know Which technology are going to invest?

Speaker 3

What cost the investment can be, let's say, Through cost organic investments, but it's not to discard the possibility to make Some acquisition also. Our preference for organic investments, we want to do this Mainly with partnership with other companies, I think, is the best way to do new investments, Mainly with big companies. And in terms of Target about future investment plans. We don't have yet the targets because As I have said, the strategic plan is been doing, but I could say that we are going to do this With the risk financial responsibility. The idea is that it's possible to do some Diversification, but maintaining our financial indicators good.

Speaker 3

Thank you for the question.

Operator

Thank you, Thomas King. The next question also from Rishka Arvallo with UBS It is for Schlosser. Schlosser, the company's current fuel price policy considers international price and import costs. What parameters could be used in a possible new policy? Is export parity for the domestically produced product an option?

Operator

Does the company considers holding lower margins on the domestically produced products in order to reduce price pressure for the final consumer?

Speaker 6

Okay. Thanks for your questions, Luis. First, I would like to take The opportunity to comment that although the term price policy is used a lot, The result of Petrobras is to elaborate its commercial strategy. That being said, The import parity is a reference to the cost of our importing competitors, but it doesn't have To be the only reference for Petrobras, we have other opportunities that we can explore Through our installed refinery capacity, logistics integration, without the shame And the operational efficiency, this allows us to compete efficiently, preserving the company's value generation. That's the answer.

Speaker 6

Back to you, Carla.

Operator

Thank you, The next question comes from Monique Greco with Itau BBA. She sent us a message. Thank you for the opportunity For addressing our questions, on behalf of Itau, I would like to wish the new executive Board good luck in this new phase. The first question from Monique is to Spinegi. Spinegi, could you comment on the challenge you expect to encounter in your new position?

Operator

And if possible, share some of the plans and ideas to be implemented during your term?

Speaker 8

Hermannique, thanks for your question. First of all, I consider that it's important to point out [SPEAKER CARLOS GOMES DA SILVA:] That we already have a very robust integrity in the organization.

Operator

[SPEAKER CARLOS GOMES DA SILVA:] And you have to turn on the camera, sorry.

Speaker 8

So, is it working, Calvin? Can you see?

Operator

Now I can see.

Speaker 5

Is it? Okay.

Speaker 8

Okay. And so first of all, I think that we must consider that we have a very robust integrity and governance system. And but That doesn't mean that there isn't anything to do. Quite the contrary, we What we need to do is now to enhance this system so that it becomes more sustainable and totally aligned with our business. And there are important aspects related to improving our performance that can be considered, such as our strategy to prevent and combat harassment.

Speaker 8

It's just an example. This is an important point for us, and we will improve it. Moreover, some technology tools can be incorporated into our compliance actions, making them more efficient and agile. We will enhance our compliance risk management, also focusing on issues that may represent risks of damage to the company's strategic objectives. And with this, we will be able to identify the most exposed areas and work in a preventive way.

Speaker 8

But the point that I consider most important is that we need to ensure that our integrity program is strong and responsive enough Respecting all the rules and focusing on people. I think that's it. Thank you, Monique.

Operator

Thank you, Spinelli. The next question from Munich Mr. William, despite the refinery maintenance carryout in the recent quarters, the company has managed to maintain high levels of refinery utilization rate. In this regard, is there still room to increase the current utilization levels? What would be the desired level of refining utilization for the refining park as a whole?

Speaker 5

Hi, Monique. Thank you for a good question for us. The answer is yes. We have got conditions to increase our refining utilization because of two reasons, okay? First one, we are performing and operating our refineries with an excellent reliability.

Speaker 5

So important to remain in this kind of off performance. And the second one, the second point It's because we won't have got big turnarounds for the next months until the end of the year. Then I think that we have a good rule to increase our final utilization for the next month Above 90% in order to capture market opportunities, okay? But The goal is to maximize our production in the quality of our operations by respecting All of the aspects of safety, environment, health and integrity. Okay?

Operator

Thank you, William. The next question is about E and P, and I'll call on Ana Paolo Ditel. On Apollo, regarding the equatorial margin, could you comment on the company's expectation regarding the approvals at Ibermo? If the regulatory agents president follows the negative opinion presented by the technical area earlier this month, Could you discuss the medium long term alternatives for the company to continue to increase its production figures?

Speaker 9

Thank you, Carla. Thank you, Monique, for your question. While Petrobras is awaiting for IBAMA positions on the Free operational assessment. This is an exercise to evaluate the company response capacity in an unlikely accident event. So it's part of the process and we are Pursuing that authorization to the next steps of the permitting process, we are following Strictly the requirements of IBAMA and there are no pending issues from Petrobras.

Speaker 9

All the resources are in the locations waiting for IBAMA's authorization. So we understand that the activity in the region is very safe. That's the reason we have planned $3,000,000,000 to drill 16 wells in the equatorial margin. And but we also have investments planning exploratory phase. And we are monitoring closely all opportunities abroad.

Speaker 9

That's part of our strategy to build up our reserves and to manage our portfolio. So thank you very much, Monique, again.

Operator

Thank you, Ana Paula. The next question comes from Gabriel Barra with Citi, and it's for Maurice Thomasin. Thomasin, Could the managers give us more information, return levels, time for construction on offshore wind farms projects being studied together with Equinor. You are on mute, Tomaszhin.

Speaker 3

Well, thank you for the question. Until the moment, we have only, let's say, I mean, a moment of understanding and some projects, some areas That we apply to environmental license at Ibauma. But let's say, We are waiting for the establishment of the regulatory framework To start studying specific projects. So at the moment, we don't have any figures About investments, time frame and so on. I believe that And not a short time of we are going to have this kind of formation.

Speaker 3

Thank you.

Operator

Thank you, Thomas King. Thank you all. At this time, the Q and A session is over. If you have any further questions, you can send to our Investor Relations team. I would like to thank you Thank you all for your attention.

Operator

It's a very important quarter with solid results from operation and financial point of view. Thank you all and have a great day.

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Earnings Conference Call
Petróleo Brasileiro S.A. - Petrobras Q1 2023
00:00 / 00:00
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