The Brazilian oil giant, Petrobras, has returned to the African oil and gas market by purchasing three exploration blocks on the island nation of Sao Tome and Principe, three years after selling off its $1.5 billion worth of Nigerian assets.
According to Reuters, Petrobras’ first pullout from Nigeria in 2020 was motivated by a number of issues, including financial difficulties caused by domestic corruption allegations and a desire to simplify its global portfolio.
However, the corporation has now made a considerable comeback, aided by increased oil prices and a renewed emphasis on foreign expansion.
The decision to invest in Sao Tome and Principe, according to the Brazilian corporation, marks the resumption of exploratory operations in Africa with the goal of diversifying the portfolio and is in line with the company’s long-term strategy, aimed at rebuilding oil and gas reserves by exploring new frontiers and working in partnership.
Petrobras said on Thursday that the acquisition of three blocks in So Tomé and Prncipe followed with all of the company’s internal and governance procedures, is in line with its Strategic Plan 2024-2028, and is subject to approval by local regulatory bodies.
Shell formerly owned the assets. Following the transaction, Petrobras will own 45 percent of two of the blocks and 25 percent of the third.
Petrobras’ chief financial officer, Sergio Leite, told Bloomberg in July that the corporation was looking for possible asset acquisitions after years of selling shares in upstream and downstream sectors.
“Petrobras had a divestment program. The company has now changed sides of the table,” Leite said.
In May, Petrobras said that its gross debt at the end of the first quarter of 2023 was $53.3 billion, the lowest level since 2010. According to Leite, any extra expenditures in asset acquisitions will not increase Petrobras’ debt.
Then, in November, Petrobras released a $102 billion capital investment plan for the next five years, with the majority of the money going towards increased oil and gas exploration.
The five-year investment plan represents a 31% increase over Petrobras’ previous five-year budget, as well as an increase over earlier expenditure forecasts for the 2024-2028 timeframe, which totaled $85 billion.
According to the company, 72 percent of the newest total will go into increasing exploration and production.
The company’s average daily output will be increased to 3.2 million barrels from 2.8 million barrels currently. To that goal, the business began drilling earlier this week in the Equatorial Margin (possibly rich in oil and gas), a location along the Brazilian coast.
Faced with financial difficulties and a shifting global energy landscape, Petrobras decided to divest its Nigerian holdings in 2020, completing the sale of its 50% stake in Petrobras Oil & Gas BV to an Africa Oil Corp. unit for $1.53 billion, effectively ending Petrobras’ operations in Africa.
The interest sold to Africa Oil’s Petrovida Holding BV was formerly held by Petrobras subsidiary, Petrobras International Braspetro BV. The $1.53 billion was reduced to $1.45 billion after adjusting for interest on the acquisition price and deducting Petrobras’ portion of fees paid to the Nigerian government for the deal’s approval.
As of the transaction’s base date of January 1, 2018, Petrobras received $1.03 billion in dividends from Petrobras Oil & Gas. Petrobras got $276 million at the transaction’s close and stands to gain an additional $123 million upon the redetermination of the Agbami deepwater oil field. A $24.8 million deferred payment was made by the end of June 2020.
