Will Petrobras Continue to Disappoint?
Petrobras has a track-record of remarkable technological achievements; however, it remains constrained by Brazilian politics and has consistently missed its self-set production targets over the last decade. In 2013, it seemed the NOC had finally accepted reality as it announced an output target similar to that of 2012 levels (2 million b/d). However, its long-term forecast estimates oil production to reach 4.2 million b/d by 2020, with much of the increase occurring in the latter part of the decade.
Douglas-Westwood (DW) in their World Development Drilling & Production Forecast expect this to be missed by some 800,000 barrels a day. Petrobras has suffered with persistent funding problems, along with project sanctioning and execution issues which have served to delay the arrival of much needed production from new fields. Historic estimates of Capex requirements have proved unrealistic and Petrobras has struggled with a double whammy of general industry cost inflation coupled with specific cost increases incurred as a result of local content requirements.
The challenge for Petrobras is the sheer number of major floating production projects required to meets its lofty 4.2 million b/d 2020 target and ensuring that these are executed on time. In this respect, the industry track record is poor. DW predict that given the NOC’s current situation oil output will reach 3.4 million b/d by the end of the decade. The difference between Petrobras’ and DW’s production forecasts, in terms of oil-targeted offshore wells required, is significant. Over the 2018-2020 period the Petrobras 2020 target would require 78 more producing wells. To stand a chance of bridging this gap, Petrobras must increase recovery in existing projects, it must find ways of delivering projects successfully and it must do all of this whilst satisfying the constraints imposed by the government of the day.