Brazilian oil giant Petrobras is reentering the African oil and gas market with the acquisition of three exploration blocks in the island nation of Sao Tome and Principe. This move comes three years after Petrobras sold its $1.5 billion Nigerian assets as part of a broader strategy to address financial challenges related to domestic corruption scandals and to streamline its global portfolio,leadership reports.
Since its exit from Nigeria in 2020, Petrobras has undergone a significant turnaround, benefiting from rising oil prices and rekindling its focus on international expansion. The decision to invest in Sao Tome and Principe aligns with the company’s long-term strategy to diversify its portfolio and rebuild oil and gas reserves by exploring new frontiers and engaging in partnerships.
The three blocks in São Tomé and Príncipe were previously owned by Shell, and Petrobras, following the deal, will hold a 45 percent stake in two of the blocks and a 25 percent stake in the third. The acquisition adheres to Petrobras’ internal governance procedures and is contingent upon approval by local regulatory bodies.
Sergio Leite, Petrobras’ chief financial officer, mentioned earlier that the company was actively seeking potential asset acquisitions as part of its shift in strategy. Despite its reported gross debt of $53.3 billion at the end of the first quarter of 2023, the company is confident that additional investments will not increase its debt burden. Petrobras aims to allocate significant capital spending, totaling $102 billion over the next five years, with a focus on expanding oil and gas exploration.
The investment plan represents a 31 percent increase compared to the previous five years, signaling Petrobras’ commitment to enhancing exploration and production activities. The company’s goal is to raise its average daily output from 2.8 million barrels to 3.2 million barrels. Petrobras recently commenced drilling in the Equatorial Margin, a potentially resource-rich area along the Brazilian coast.
In 2020, Petrobras divested its Nigerian holdings by selling its 50 percent stake in Petrobras Oil & Gas BV to an Africa Oil Corp. unit for $1.53 billion. The proceeds, adjusted to $1.45 billion, were utilized to fully cease operations in Africa. Petrobras received dividends, deal closing payments, and is expected to receive additional payments related to the transaction, contributing to the company’s improved financial standing.