Finding the Sweet Spot: Petrobras' Quest for Balance

As Petrobras prepares to release its new five-year business plan, CFO Fernando Melgarejo is emphasizing the importance of "realistic" spending levels. This means setting a balance between investing in the company's future and keeping debt under control. The plan, expected to be released in November, will likely include a potential increase in the company's debt ceiling, but Melgarejo stressed that this doesn't necessarily mean Petrobras will take on more debt. Instead, the increased limit will provide flexibility for future investments. Petrobras has been facing a challenge in replenishing its oil and natural gas reserves, which are projected to decline by 2030. This is an uncomfortable situation for the current management, who are focused on finding ways to increase reserves without compromising the energy transition. The company is well aware that it cannot ignore the transition to renewable energy sources, but it must also prioritize its core business. In a recent bond sale, Petrobras raised $1 billion in its first international operation since 2023. The strong demand for the bonds, more than three times the offering amount, is a sign of confidence in the company's new management. This success has given Petrobras a boost of momentum as it prepares to release its new business plan.