Petrobras’ Revenue Is Looking Up With Tailwind From The Brazilian Economy

Petrobras (NYSE:PBR) has been divesting non-core assets over the last few years in order to improve efficiency and lower debt. With the divestments complete, Petrobras’ Revenues in 2020 should see an uptick – especially as Upstream production increases significantly. In the past, being straddled with inefficient assets meant that Petrobras could not increase production, but with asset quality improving and 2020 showing signs that crude prices will improve, Petrobras’ will in all likelihood take advantage of the improved environment and increase production.

Petrobras is a Brazilian oil multinational company that produces oil, natural gas and energy biofuels. It employs over 68,000 personnel and is owned 54% by the Brazilian government. The company largely serves the Brazilian and Latin American markets and produces and refines crude and natural gas while also producing electricity. It competes with companies such as Exxon, BP and Royal Dutch Shell. We detail trends in the company’s revenues over the years along with our forecast for 2019 and 2020 in our interactive dashboard.

A Quick Overview of Petrobras’ Revenues

Petrobras is expected to have brought in a total of $173 billion in revenues for full-year 2019. This includes the following 3 divisions:

• Upstream: The division explores and produces crude and natural gas. It accounts for 32% of the total revenue. ($54 billion).
• Downstream: The division is responsible for retail and marketing of refined productions. It accounts for 60% of total revenue. ($103 billion).
• Electricity & Biofuels: The division produces and distributes power throughout Brazil. It accounts for 8% of total revenue. ($15 billion).

Our outlook for Petrobras in 2020:

Upstream:

• Petrobras is expected to see higher revenues in 2020 thanks to increased crude volumes.
• With crude production hitting 3.1 MBOE last November (an increase of 14% year-on-year), Petrobras is expected to hit 3.3-3.5 MBOE in crude production for 2020.
• We project that demand from Latin America will robust enough to absorb the increase in supply.
• Meanwhile, natural gas is expected to increase at a relatively moderate pace with a global glut weighing on local natural gas prices.
• But with global headwinds ensuring little room to move, we see a negligible increase in output from this division.

Downstream:

• Petrobras expects Downstream operations to improve slightly in 2019 as the Brazilian economy improves
• Petrobras has been contending not only with a low-growth environment in Brazil, but one in Latin America at large.
• This has meant that Downstream divisional growth has remained tepid.
• But as the broader continental economy improves, we are likely to see Petrobras’ ramp up its Refining and Marketing operations in 2020.

Electricity & Biofuels:

• The Brazilian economy has shown signs of picking up in 2019 and may improve further in 2020.
• This should help Petrobras’ biofuels business grow faster this year.

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams | Product, R&D, and Marketing Teams

More Trefis Research

Like our charts? Explore example interactive dashboards and create your own.