Six years from now, in 2029, Brazil should reach a record both historical and problematic: oil production in the country may reach a peak, with the estimate of 5.4 million barrels per day (m/boed). The projection is from the Energy Research Company (EPE), linked to the Ministry of Mines and Energy (MME).
The number is historic because, today, the country produces about 3 million barrels. But it is also problematic, as the increase in production will represent more emission of gasses that contribute to the greenhouse effect in the atmosphere. In addition, extraction involves environmental and social risks, for example, in cases of leaks. This is precisely what environmentalists fear about the drilling at the mouth of the Amazon River, whose projects by Petrobras were even barred by Brazil’s environmental regulator, Ibama, in May.
The increase in oil production by Petrobras also raises another issue: whether it will be possible to meet the goal of reaching zero greenhouse gas emissions in its operations by 2050.
Last year, 47.7 million tons of carbon dioxide were emitted into the atmosphere by Petrobras in its whole operations. Of this total, 44.3 million, or 93%, came from oil and natural gas exploration and production, including refining and shipping.
From 2015 to 2022, the Brazilian state-owned company reduced its CO2 emissions by 23% in the so-called scope 1 and scope 2, which are the gasses emitted by the direct operations of the company and by the acquisition of electric and thermal energy. Emissions resulting from the subsequent use of the fuel are not accounted for here.
However, according to Agência Pública, this reduction should not be kept at the same pace. From 2023, according to projections of the company, the trend is for the curve of emissions from the extraction of fossil fuels to stop falling, remaining as a practically straight line until 2030.
In addition, Petrobras may end up going against the forecast of foreign oil companies, which promise to maintain the reduction of their emissions.
Petrobras expects lower reduction of emissions when compared to foreign oil companies
It is precisely the Equatorial Margin — a maritime region that goes from the state of Rio Grande do Norte to Amapá, where the mouth of the Amazon River is located — that holds the promise of oil production increase by Petrobras.
The National Petroleum Agency (ANP) estimates that the exploration blocks operated by Petrobras in the region host a reserve of about 16 billion barrels in the pre-salt layer. There are also those who foresee a scenario of 11 billion, in an analogy to what has already been estimated with the wells drilled on the coast of Guyana, a basin that holds geological similarities with the area coveted by Petrobras.
In its strategic plan for the next five years, the company foresees R$ 6 billion in exploratory investments, and half will be directed to the Equatorial Margin. Over there, the state-owned company has an interest in drilling 16 wells in blocks operated in the Foz do Amazonas, Potiguar, Pará-Maranhão and Barreirinhas basins.
The first of these, the Morpho well, in the FZA block of Foz do Amazonas, is the one that had its licensing request denied by Ibama due to environmental risks and is now waiting for an appeal. In the best scenario studied by Petrobras, it will take four to five years between the discovery of oil and its production in each well.
From 2015 to 2022, according to Pública, Petrobras reduced the amount of gasses emitted in whole operations by 39% — they are the sum of all emissions from the operations of the company, including those from thermoelectric plants. Not considering the emissions from the plants, the drop was of 23%. The forecast for 2022 to 2030 is that this reduction remains at only 8.2%.
In contrast to the 8.2% of Petrobras, Shell forecasts a reduction of 30% in the same period, BP, 21%, Equinor ASA, 36%, Chevron, 29%, and Exxon Mobil, 14.3%.
With that, Petrobras may surpass Shell and Chevron in the amount of emissions, becoming the third biggest emitter among the six major oil companies — currently it is the fifth.
Petrobras projects to offset emissions are no miracle, says expert
Petrobras strategic plan for the next five years was presented at the end of 2022. It showed that, of the US$ 78 billion in investments planned for all areas of the company, only US$ 4.4 billion, or 7%, will be directed to low-carbon initiatives.
Of this total, most of it, US$ 3.7 billion, should go to the development and use of technologies known as CCS (Carbon Capture and Storage), capable of capturing and storing the CO2 released during the fossil fuel exploration operation.
With equipment of this type, Petrobras reinjected 10.6 million tons of CO2 into the wells during oil and gas exploration and production operations in 2022. The idea is to reach 80 million tons of reinjected CO2 by 2025 in CCS projects.
Although the numbers seem significant, environmentalists consider that the use of CCS solves only part of the problem and will be insufficient if there is no considerable cut in emissions generated by the fossil fuel sector as a whole — also considering the use of fuels, which are definitely responsible for most of the emissions worldwide.
“These technologies might be an alternative. But I’m afraid that they’ll be seen as a miraculous solution to such a complex problem”, says Vinicius Nora, Climate and Oceans manager at the Arayara International Institute. “What we really need is profound changes in the energy matrix on a global scale”, he criticizes.
Petrobras also foresees US$ 600 million for renewable diesel and aviation biokerosene initiatives. And US$ 100 million for renewable energy research and development.
Large oil companies have also invested in the process of mitigating and decarbonizing their operations through CCS.
Mahatma cautions that Petrobras has placed an overwhelming emphasis on the decarbonization process, redirecting nearly all of its investments, technological innovation capabilities, and technical collaborations towards this endeavor. Meanwhile, other companies, while also recognizing the importance of decarbonization, are moving swiftly and adopting distinct approaches to prioritize this transition process.
In 2023 alone, Chevron intends to allocate US$ 1 billion in renewable energy projects, out of the R$ 14 billion expected in total investments. Equinor plans to allocate US$ 18.3 billion for new means of producing energy from a clean matrix by 2023 to 2026. Exxon Mobil said it would be R$ 17 billion for low-carbon initiatives, and BP intends to set aside US$ 8 billion a year for renewables. Shell, in turn, recently announced it will invest between US$ 10 and US$ 15 billion in decarbonization technology in the coming years, although it has decided to maintain the level of oil production until 2030.
“Petrobras current Strategic Plan, which was approved in the previous government, and which we still don’t know if will be revised, is very shy regarding investments in renewable sources. It’s hardly anything, which is very different from the rest [of the oil companies]. Most are investing in renewables. All others are going in the same direction”, says André Ferreira, executive director of the Institute of Energy and Environment (Iema).
According to Ferreira, offshore wind and green hydrogen projects are the segments of greatest interest for investment by oil companies worldwide. In the case of Petrobras, there are signs of changes in its strategic plan, but no decrease in investments in oil extraction. “They talk of investments in renewables, which will be their boldest move, but they won’t stop investing in fossils at all. This will continue in this government”, he says.
Although it has one of the cleanest energy matrices in the world, Petrobras management of the last six years, especially under Jair Bolsonaro government, has focused on the exploration and production of fossil fuels, says Mahatma dos Santos, director of the Institute for Strategic Studies of Oil, Natural Gas and Biofuels (Ineep).
The explanation provided highlights that Petrobras, the Brazilian state-owned company, experienced a significant dismantling and disinvestment phase from 2016 to 2022. This process was coupled with a business strategy focused primarily on short-term profitability, leading to a systematic reduction in investments related to the energy transition. Consequently, this approach caused delays for the company in the technological and geopolitical race concerning other oil companies.
As per the expert’s assessment, Petrobras has primarily focused its recent investments on decarbonization and emission mitigation solutions, accounting for approximately 4% to 6% of its total Capex. Meanwhile, other companies in the sector have made significant strides by prioritizing the development of new technological pathways and diversifying their portfolios, notably in the wind and solar/photovoltaic segments.
Under the previous management, the strategic plan emphasized the company’s imperative to pursue profitable diversification. Notably, Petrobras was actively conducting investment feasibility studies in the offshore wind sector and exploring energy production through the utilization of hydrogen molecules. Moreover, the company was also engaged in research efforts aimed at developing biorefining technologies. These initiatives sought to propel Petrobras towards a more sustainable and innovative future in the energy landscape.
According to experts, if it were not for this change of route, the country would today be a reference in sustainable energy alternatives. “The latest management of Petrobras focused all its investments on the most economically profitable assets and lost the horizon for […] being a vanguard company in energy transition, since Brazil has favorable characteristics for the development of segments such as wind, solar and green hydrogen production”, explains Mahatma dos Santos.
With the change to the Luiz Inácio Lula da Silva government (PT), the National Secretariat for Energy Transition and Planning was created, one of the first signs that there may be an attempt to return to the previous Petrobras business strategy. Maurício Tolmasquim, a researcher who was president of the Energy Research Company (EPE) under former Lula and Dilma Rousseff governments (PT), was appointed to lead the sector.
In May, during an event in the United States on offshore technologies, Tolmasquim said that Petrobras is attentive “to the diversification of its portfolio”, but also focused his speech on the presentation of Petrobras results with decarbonization projects – CCS.
According to the stance of the current president of Petrobras, Jean Paul Prates, however, the energy transition might not be a priority at the moment. In a recent interview with Bloomberg, he said he expected Brazil to be the last country in the world in oil exploration. “We’ll gain market share”, he said at the time. “We may be the last ones to produce oil in the world”.
Reducing emissions while maintaining oil production is “an exercise in futility”
Even if pre-salt oil is capable of emitting less CO2 (about 10 kg per barrel, against 17 kg per barrel in the world average) in the production process, the reduction of environmental risks stops there.
“A strategic vision of the energy sector should consider emissions from the oil (and gas) chain as a whole, including the exploration, production, transportation, processing and burning of hydrocarbons, which account for most of the emissions of the sector”, advocates Marcelo Laterman, spokesperson for justice and climate at Greenpeace Brazil.
The goal of the Paris Agreement is to contain the increase in the average temperature of the planet to less than 2 ºC, with efforts not to exceed 1.5 ºC. Nearly 200 countries have pledged to reduce greenhouse gas emissions to achieve this goal.
In 2018, the International Energy Agency (IEA) made a global proposal for an energy transition model with the goal of reducing greenhouse gas emissions to zero by 2050. In 2021, the IEA published a study showing that if any more fossil fuel reserves were exploited from that year on, the chances of global temperature rising by more than 1.5°C would be even greater, with a consequent increase in natural disasters.
“To have an idea, with a warming of 1.5 degrees Celsius, we are talking about the risk of death of 70 to 90 percent of the corals in the world. It’s a very extreme scenario already. With the course of current policies, we will not achieve this goal”, warns Vinicius Nora.