Petrobras CEO paints oil & gas industry as ‘fundamental’ piece of energy transition puzzle

While the global energy landscape’s shift toward low-emission and green sources of supply is seen as the best way to usher in a more sustainable energy future, the role of oil and gas in this transformation period has sparked many debates. However, the Chief Executive Officer (CEO) of Petrobras, Brazil’s state-owned oil and gas giant, is adamant that these two fossil fuels are an integral part of the energy transition engine, with domestic energy sources paving the way toward a low-carbon future.

During an energy conference in Houston, United States, Jean Paul Prates, Petrobras’ CEO, provided his take on solutions to neutralize global emissions while defending international cooperation and financing and compensation arrangements to leverage decarbonization, as well as greater energy efficiency towards the goal of emissions neutrality.

While arguing that local energy sources were the path to “a fair energy transition,” Prates reinforced the oil and gas sector’s “fundamental part” in structuring the energy transition and leveraging it on a large scale. According to Petrobras’ CEO, everyone’s goal should be to reduce emissions, without competition between technologies, thus, the world needs to seek ways to combine the best technologies and energy sources based on each location.

“We live in a world of inequalities and differences. We still face energy poverty in many places. Therefore, we must be unanimous in seeking a fair energy transition, which is carried out gradually and responsibly,” underscored Prates.

For Petrobras’ CEO, one of the decarbonization challenges is to mitigate the need to transport energy over long distances by searching for local solutions, as the great advantage of using fossil fuels in energy systems lies in their relatively low transport cost and their ability to store energy. In line with this, he is convinced that local energy sources will be “the key to reducing emissions.”

“Each company will need to consider its technical skills, its existing asset base and the endowments of natural resources and unique social and economic conditions of their respective operating geographies to formulate their strategies for participating in the energy transition,” highlighted Prates, who believes that Petrobras, like Brazil, has the advantage in such a context of having quality oil, low cost, and low emissions.

The Brazilian giant recently inked a memorandum of understanding (MoU) with Japan’s Mitsui & Co. to explore low-carbon business opportunities in Brazil. This came shortly after Petrobras picked Curtiss-Wright Corporation to deliver a seal-less canned motor boosting system for its field in the Campos Basin to enable reliable subsea production.

Meanwhile, Mauricio Tolmasquim, Petrobras’s Director of Energy Transition and Sustainability, discussed the challenge of developing the potential of gas reserves and technological solutions to reduce the cost of green hydrogen and increase its scale, agreeing with other participants – at the same event where the Brazilian firm’s CEO expressed its views – that Latin America is rich in quality energy resources with great potential.

The main challenges to developing this potential are planning, infrastructure, and lower costs. One of Petrobras’ strategies in gas markets is to expand supply, investing in infrastructure projects such as Rota 3, which will feature a gas pipeline with a capacity of 18 million m3 per day; the BMC-33 project, which foresees a gas pipeline with a capacity of 16 million m3 per day; and Sergipe Águas Profundas – SEAP project, which provides an additional 18 million m3 per day of capacity.

While elaborating that new technologies are being studied to make the production of green hydrogen cheaper, Tolmasquim emphasizes that “Brazil will be the country with the lowest cost of operating green hydrogen” by 2030 based on forecasts. As Petrobras consumes large volumes of gray hydrogen in its refining activities, the company sees the green hydrogen market as an opportunity, thus, Tolmasquim is certain that the firm can replace gray with green hydrogen in its refineries.

Petrobras sees oil and gas as drivers of growth, which will propel and fund the energy transition to greener sources of supply, as confirmed by its new strategic plan for the 2024-2028 period, where oil and natural gas have been given the biggest slice of the $102 billion investment pie. The Brazilian player reached total oil and natural gas production of 2.78 MMboed in 2023, 3.7% higher than the production recorded in 2022.

In line with its net zero goals, the state-owned giant plans to dish out $11.5 billion on projects that will enable a reduction in its carbon footprint, spotlighting the role of biorefining, wind, solar, carbon capture, utilization, and storage (CCUS), and hydrogen in this decarbonization quest.