Brazilian oil giant Petrobras has re-entered the African oil and gas market by acquiring three exploration blocks in the island nation of Sao Tome and Principe. This move comes three years after the company sold its $1.5 billion Nigerian assets.
Petrobras initially exited Nigeria in 2020 due to a combination of financial challenges linked to domestic corruption scandals and a strategic effort to streamline its global portfolio. However, the company has experienced a significant turnaround, buoyed by increasing oil prices and a renewed emphasis on international expansion.
The decision to invest in Sao Tome and Principe aligns with Petrobras’ long-term strategy of diversifying its portfolio and rebuilding oil and gas reserves through exploration in new frontiers. The acquisition of the three blocks, previously owned by Shell, marks a resumption of exploratory operations in Africa for Petrobras.
According to Petrobras, the acquisition complies with the company’s internal governance procedures and its Strategic Plan for 2024-2028. The deal is subject to approval by local regulatory bodies.
Post-acquisition, Petrobras will hold 45 percent stakes in two of the blocks and a 25 percent stake in the third. Sergio Leite, Petrobras’ chief financial officer, expressed the company’s interest in potential asset acquisitions, highlighting a shift in strategy.
“Petrobras had a divestment program,” Leite said. “The company has now changed sides of the table.”
Petrobras reported a gross debt of $53.3 billion at the end of the first quarter of 2023, the lowest level since 2010. Leite assured that additional investments in asset acquisitions would not increase Petrobras’ debt. In November, the company announced a budget of $102 billion in capital spending for the next five years, with a major focus on boosting oil and gas exploration.
This five-year investment plan represents a 31 percent increase over the previous five years. Approximately 72 percent of the budget will be allocated to enhance exploration and production, with plans to increase the average daily output from 2.8 million barrels to 3.2 million barrels.
In 2020, Petrobras completed the divestment of its Nigerian holdings, fully ceasing operations in Africa. The sale involved the company’s 50 percent stake in Petrobras Oil & Gas BV to an Africa Oil Corp. unit for $1.53 billion. Petrobras subsidiary Petrobras International Braspetro BV held the stake, and the company received dividends and payments as part of the transaction.
