Petrobras: World will not stop needing oil – 05/31/2023 – Environment

The first Petrobras director focused on energy transition and sustainability, engineer Maurício Tolmasquim admits that the company has fallen behind in the process of transforming the sector, which dedicates more and more resources to renewable energies.

“We have to make up for lost time”, he says, also citing pragmatic reasons such as access to financing and attracting investors among the reasons for returning to this area, which the Bolsonarist management of the company abandoned.

At the center of a controversy over the opening of a new exploratory frontier in the North region, in the Foz do Amazonas basin, Petrobras argues that the world will continue to need oil in any decarbonization scenario and that its production emits less than that of competitors.

“We have to do our best to get rid of oil, to decarbonize. But even if we do our best, there will be demand”, says Tolmasquim. “Petrobras oil has very low emissions. If the world consumes our oil, we will be helping with decarbonization.”

Has Petrobras already defined any investment in renewable energies? We are looking at projects, talking to many companies and we want to start trying to close some initiative this year.

Not just in offshore wind [no mar], which still does not have an established regulatory framework. We can enter other areas related to renewables that are already happening. We need to do.

We are hoping that the offshore issue will be resolved soon, but we are looking at other business opportunities. At the moment, in Brazil, but we don’t rule out things outside Brazil.

The other administration said that Petrobras should focus on oil. Why go into renewables? The motivation is very pragmatic. There is an ethical question, of solidarity with future generations. But there is a business issue. First, all projections show that oil demand tends to fall in the coming years.

In the scenario of the International Energy Agency, there is a drop of 40% if the Paris Agreement is met. Petrobras, as it has competitive oil of good quality, has the potential to meet this remaining demand, but it will probably be at a lower price. So you have to prepare for that future. But this is more medium and long term.

And in shorter terms? In the short term, the first issue is financing. Increasingly, banks and financiers are placing conditions to lend resources. Either we won’t have access or the cost of financing will grow a lot. This is already happening.

And there are investors. Some of them are American, Canadian pension funds, which have restriction clauses for companies that emit a lot, which do not have mitigation actions. And we are late, because the other companies have already left. We have to make up for lost time.

We are doing very well in the decarbonization part of our products, it is better than the world average. But with regard to greening products, we have a lot to do, changing molecules for electrons.

But how does the opening of a new oil frontier, such as Foz do Amazonas, fit into this context of transition? Brazil may be a 100% renewable country, but the world will still need oil, even in the most extreme cases of restrictions. Petrobras oil has very low emissions. If the world consumes our oil, we will be helping to decarbonize. With other oil, the emission would be higher.

We have to do our utmost to get rid of oil, to decarbonize. But even doing the maximum, there will be a demand. In all scenarios. Now, this demand will have to be offset, first by oil that emits less, then by capturing carbon.

Other oil companies have already been working on compensation plans, but Petrobras has not yet. Will start? We created a sustainability area that will look at solutions based on nature, reforestation, biodiversity, circular economy issues, waste recovery. This is very much in line with the decarbonization strategy. We are going to be a major player in this process.

Petrobras seems to be lagging behind on these issues. In internal processes we are ahead of schedule, today the average emission intensity in oil exploration in the world is around 18 kilograms of CO_two per barrel, and Petrobras’ is 15.

We are fine in the photo. Now, you have to do other things, and that’s the challenge. Have to go to scope 3 [do Acordo de Paris]which is to decarbonize the supply chain and product portfolio.

The company’s investment plan has practically abandoned renewables in recent years. Will this area be covered this year? Yes, that’s the expectation. But everything will be done, we always say, respecting issues of the company’s financeability. Petrobras’ project approval strategy is very strict, we’re going to have to go through it.

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Mauricio Tolmasquim, 64

Director of energy transition and sustainability at Petrobras, he was one of the formulators of energy policy in the first PT governments and held the presidency of EPE (Empresa de Pesquisa Energética) between 2005 and 2016. Economist and engineer, he holds a master’s degree in energy planning from UFRJ and a PhD in development economics from the École des Hautes Études en Sciences Sociales (EHESS).

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