Speaking on the first day of the CERAWeek by IHS Markit conference, the chief executive officers (CEOs) of Statoil and Petrobras discussed the tough decisions each company faces in the wake of unique challenges.
Statoil CEO Eldar Sætre discussed a number of issues, including the oil price downturn and the need for global integration within the industry. He said the industry will eventually have to operate in a low-carbon environment as governments around the world further commit to addressing climate change by forcing limits on carbon dioxide and methane emissions. While acknowledging that oil and gas “will continue to be a significant part of the energy mix for decades to come,” he said that companies that practice carbon efficiency now will have a competitive advantage in the future.
To that end, Sætre said Statoil will allocate between 15% and 20% of its CAPEX in renewable energy by 2030, provided that the company can access and mature sufficiently attractive projects.
“How we run our industry matters, and it will do so more and more in our future. At the same time, technology and innovation are rapidly reducing the costs of renewable energy. Renewables are already the fastest-growing source of new power generation and will increasingly become cost-competitive without subsidies. In Statoil, we think of ourselves as an energy company, with renewables as an integrated part of our business.”
Petrobras CEO Pedro Parente addressed Operation Car Wash, the corruption scandal in which Petrobras executives allegedly accepted bribes in exchange for awarding contracts to construction firms at inflated prices. The resulting investigation has led to the arrest of the treasurer of Brazil’s Worker’s Party and the chief of staff of former Brazilian president Luiz Inácio Lula da Silva.
Parente stressed that Petrobras received no benefit from the bribery scheme and is still dealing with the aftermath; in 2015, the company booked nearly USD 17 billion in write-downs due to graft and overvalued assets, which has forced a massive cut in CAPEX. In September, Petrobras announced a 25% cut in planned investments from 2017 to 2021 to help reduce its USD 130 billion debt burden.
By cutting expenses and consistently meeting production goals, Parente said Petrobras will begin to regain public trust.
“The fact that our company moved in the newspapers from the scandal page to the business page is very good, but it’s important to stress that this is just the beginning of a long work,” he said. “We are humbled by the responsibility and challenges that are ahead of us. We will recover credibility as we deliver the results that we promise. That is pretty much what we are doing now.”
The two executives were each asked about the recent partnership between their respective companies in Brazil. Last July, Statoil paid USD 2.5 billion for 66% ownership and operator status in Carcará, one of Petrobras’ largest offshore prospects. Two months later, the two companies signed a memorandum of understanding to collaborate on existing fields in the Campos and Santos Basins, later extending that partnership to target aging wells.
Sætre said Brazil will play a vital role in Statoil’s operations moving forward.
“It’s been very good to establish this partnership,” Sætre said. “For Statoil, Brazil is really a kind of look-alike from the Norwegian Continental Shelf at different phases, different conditions. In the subsurface and in the offshore, there are so many similarities.”
CERAWeek: Statoil, Petrobras CEOs Discuss Leadership Challenges in Difficult Environments
Stephen Whitfield, Senior Staff Writer
07 March 2017