Petrobras (PBR.US) CEO: Transitioning to renewable energy sources means exercising caution towards substantial dividends.

Brazilian oil company Petrobras (Petrleo Brasileiro S.A., also known as Petrobras) CEO Jean Paul Prates stated in an interview that the largest oil company in Latin America will take a more cautious approach in issuing large dividends as it transitions to becoming a renewable energy giant. Jean Paul Prates mentioned in the interview that over the next decade, around half of Petrobras' revenue will come from wind energy, CECEP Solar Energy, and renewable car fuels, and the company is preparing for acquisitions this year to drive this shift. However, at the same time, the company also needs to invest heavily in oil exploration domestically and internationally to ensure continued oil production over the next few decades. When asked about paying special dividends, Jean Paul Prates said, "We need to be cautious. Shareholders will understand. I will be more conservative, rather than more aggressive. We are in the midst of a major decision to transform into an oil company." In 2022, Petrobras was the second-largest dividend payer in the oil industry, behind only Saudi Aramco. Analysts believe that Petrobras has room to return billions of dollars in special dividends to investors, with expectations that the company will announce this news on March 7 when it releases its earnings. Citigroup estimates this number could reach as high as $7 billion, while Goldman Sachs anticipates it could reach as high as $8 billion. Petrobras' strong commitment to developing renewable energy stands in stark contrast to some of its peers. European oil giants Shell and BP have shifted their focus more towards fossil fuels from renewable energy. American oil giants Chevron and ExxonMobil have never prioritized wind energy and CECEP Solar Energy, instead focusing their business plans on oil and natural gas. 55-year-old Jean Paul Prates took over as CEO of Petrobras in January 2023. He ruled out the possibility of making "sharp changes" in strategy. He stated that Petrobras needs to be prepared for acquisition opportunities in renewable energy, oil, petrochemicals, and fertilizer production areas. The company is considering investing in onshore wind energy and CECEP Solar Energy projects in Brazil before moving into offshore wind energy projects. The company is also expanding its plant-based fuel scale in aviation and maritime industries, which are the hardest to decarbonize. Jean Paul Prates mentioned that Brazil has better conditions for offshore wind energy projects compared to the US or the North Sea, and developing this industry in Brazil could provide new business lines for suppliers of services used by oil projects. However, one of Jean Paul Prates' main concerns is that as the world begins to move away from fossil fuel dependency, Brazil's oil projects may not have enough suppliers. Therefore, Petrobras is negotiating with the Brazilian government on an industrial policy to support equipment suppliers and shipyards in Brazil. The company is also looking for ways to procure essential goods and services from neighboring countries and geopolitical allies. One of President Lula's economic policy pillars is a comprehensive industrial plan that will provide credit and funding to sectors such as healthcare, national defense, and agriculture, to promote Brazil's green transformation. Jean Paul Prates stated that as a state-owned company, Petrobras needs to participate in energy policy decision-making with the government, but he also mentioned that this collaboration does not mean interference in the company's commercial strategy. Additionally, Petrobras is in negotiations with the investment arm of the Abu Dhabi sovereign wealth fund, Mubadala Capital, hoping that it will become a partner in a refinery that was sold by the previous management. Jean Paul Prates mentioned that an agreement could be reached between the two parties by the end of this year. Mubadala Capital is expanding the Mataripe refinery in Bahia, northeast Brazil, to produce renewable fuels, which is a project of interest to Petrobras. Jean Paul Prates stated that Petrobras may not operate this refinery and it could be split into several independent companies.