:strip_icc()/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2025/r/g/h0X60RTFOCQ8zICcC5XA/petro.png "Petrobras to include bn cost-cutting plan in new business strategy | Business")
Petrobras’s new business plan for 2026–2030, expected to be unveiled at the end of November, is set to include a target of cutting around $8 billion (about R$43 billion) in costs over five years, Valor has learned. The spending cuts are part of the state-owned company’s strategy to navigate potentially adverse scenarios of lower international oil prices, a path also being followed by other global oil majors.
A lower oil barrel price has a direct negative impact on revenues. With weaker cash generation, companies must adjust investment plans to avoid higher leverage. This is the backdrop for Petrobras’s cost-reduction program. On Monday (8), Brent crude for November delivery closed at $66 per barrel. Market projections point to a range between $65 and $70 for the year.
The $8 billion figure had already been mentioned by company executives during the presentation of second-quarter results, but without details. According to sources, the matter did not advance at the board level at the time due to a lack of further information from the management team.
A key focus of the cost reductions will be on platform construction projects. Four platforms scheduled for bidding are under budget review. One is the unit to be deployed in the revitalization of the Barracuda and Caratinga fields in the Campos Basin (Rio de Janeiro). Two others are the SEAP 1 and 2 projects, planned for the Sergipe Deepwaters Basin. Petrobras has already announced budget revisions for the platform designed to revitalize the Marlim Sul and Marlim Leste fields, also in the Campos Basin.
The oil giant has not confirmed the projected savings figure but said cost-reduction measures will be detailed in the new business plan. “Studies are underway, and therefore it is not possible at this time to provide a precise figure for the savings that may be achieved,” the company said in a statement.
Brent had hovered around $80 in late 2024 and part of this year. Increased production by the Organization of the Petroleum Exporting Countries and allies (OPEC+) and expectations of slower growth in major economies pushed prices down to the $65–70 range.
CEO Magda Chambriard, Exploration and Production Director Sylvia Anjos, and Engineering Director Renata Baruzzi have reiterated that the average breakeven price of Petrobras’s projects is $28 per barrel, with 98% of investments being viable at $45 Brent.
The company has long questioned platform costs. Recent years have seen higher prices for FPSOs (floating production, storage, and offloading vessels) and fewer global suppliers due to mergers and acquisitions. As a result, Petrobras has faced failed tenders and delays. The state-owned company has turned to Brazilian suppliers in a bid to cut costs and improve service conditions.
The construction of a new platform has been costing around $4 billion (R$21.6 billion). Global uncertainties now add to the challenges facing the oil and gas industry, prompting Petrobras to reassess spending.
The company said it has been engaged in a continuous effort to cut costs and optimize processes, especially in light of current oil prices. Efforts include simplifying and streamlining projects, revisiting technical and operational areas to “do more with fewer resources.”
Globally, Shell has also undertaken cuts. In a recent interview with Valor, CEO Wael Sawan said the company has reduced costs by nearly $4 billion in the past two and a half years and expects to save $5 billion to $7 billion by 2028. “We are focusing on what we call performance, discipline, and simplification,” he said.
BP has followed a similar path. In its second-quarter results, the company reaffirmed plans to cut $4 billion to $5 billion in costs by 2027 compared to 2023 levels, having already achieved $1.7 billion in savings.
Sharp drops in Brent, on the order of $15 per barrel, create a cash-flow gap for companies like Petrobras. “If the business plan is to be self-financed, as the company has stated, Petrobras needs to cut costs or investments,” said a source in the sector.
The question is whether investments would also be adjusted in an election year. One possibility would be to push part of the spending planned for 2026–2027 into later years. Another sensitive issue is dividend payments.
Debt management is also a challenge. Petrobras has set a gross debt ceiling of $75 billion, currently at $68 billion. In a recent letter to investors, asset manager Vista Capital noted that the company chose to pay second-quarter dividends nearly twice its cash generation, financed by additional borrowing. “With oil now about 8% below the average of the quarter, the unsustainability of this dividend policy is clear,” Vista said.
link