Q4 2022 Petroleo Brasileiro SA Petrobras Earnings Presentation
Speaker 1: Fourth quarter 2022 results. It's great to have the join us today. We'd like to inform you that all participants will follow the transmission by internet as listeners. After an introduction, a Q&A session will begin. You can send us questions via email at petroinvested at petrobras.com.br.
Speaker 1: Today we have with us Jean-Paul Prattis, Petrobrei CEO , Claudio Macella, Chief Trading and Logistics Officer, Fernando Vosges, Chief Exploration and Production Officer, Joanne Hickie, Hitter's Housing, Chief Production Development Officer, Paolo Palaya, Chief Digital Trading and Innovation Officer, Rafael Chaves, Chief Institutional Relations and Sustainability Officer.
Speaker 1: Rodrigo Aújo, Chief Financial and Investor Relations Officer, Rodrigo Costa, Chief Refining and Natural Guests Officer, and Salvador Dahan, Chief Governance and Compliance Officer. To initiate, I'll press the floor to Petrobras CEO , Champol Pratt, with your hand.
Speaker 2: Hello to all of you. It is an honor to speak to you as a CEO of Petrobras at a time when we are disclosing such an expressive and symbolic result for the company. At the same time, we met all our production targets. We advanced in the prospecting of new reserves and in the decarbonization of our operations.
Speaker 2: We maintain our competitiveness, raising the utilization factor of our refineries, while launching new products with renewable content. All these achievements are extremely important in the complex scenario we live today. As global consumption of fossil fuel hits record highs, we must prepare ourselves for the inevitable energy transition.
Speaker 2: While no one can say precisely how wrong the traditional oil and gas industry will be dominant, it is indisputable that this moment is getting closer and closer. We will maintain our leading role in oil and gas production while working to build a new future.
Speaker 2: Our main goal in the new management that starts now is to make Petrobras an increasingly balanced company strong and prepared to be the protagonist of the energy transition, drawing on its unique knowledge of Brazil's potential for this growing market. Investment in renewable energy sources such as hydrogen and offshore wind.
Speaker 2: are already foreseen in the current strategic plan. Our operations in deep and ultra deep water put us in privileged position for the generation of offshore wind energy, even integrated with oil and gas production. We are major producers of natural gas that transition fuel for hydrogen.
Speaker 2: We will continue in irresponsible and transparent manner seeking more opportunities to diversify our operation, attentive to the society's demands.
Speaker 2: for a fair energy transition, guaranteeing energy that is available, accessible and sustainable for all.
Speaker 2: I reiterate our ambition to neutralize our operational emissions within a time frame compatible with that established by the Paris Agreement. To this end, we have invested in the decarbonisation of our operations. We already operate the world's...
Speaker 2: largest offshore carbon re-injection program. And we are implementing a series of state-of-the-art technologies to reduce emissions. We are a company in permanent transformation. We are working every day to make Petrobras a company that is increasingly stronger, more responsible, and connected to the future. Because we believe this is the best way to fulfill our responsibility to society and to our investors.
Speaker 3: Thank you very much. Welcome. Thank you, Jean. Now, pass the floor to Petro-Vrai-Ciafou, Rodrigo Arlujo. Please, Rodrigo, go ahead. Thank you, Carla. Thank you, Jean. Thanks, everyone, for being with us today and enjoying our earnings call for the fourth quarter of 2022. I'm very glad to be here and to report that the important and strong results that we have for the...
Speaker 3: delivering the relevant projects that we have on time and within cost. As we all know, about 90% of the results and the returns from projects come from the FID and also from being able to deliver the projects on time. So I'm very glad with the work that has been done in terms of well drilling, time reduction, delivering, contracting on time, delivering.
Speaker 3: for the company's future. We have also reached the highest utilization factor of our refineries in the last five years, in a year in which we had the relevant scheduled stoppages that were quite challenging to deal with, especially that were still in an environment where we still...
Speaker 3: facing the impact of COVID-19 not only on the teams, but also on the supply chains. We have also very important results in terms of our commercial and trading operations in N22. We were able to diversify our export based not only for the US market, but also for Europe and other Asian markets. We have been able to deliver the presale oil that is quite competitive in terms of cost and in terms of emissions in new markets in this environment in which the ratio range.
Speaker 3: As we always,
Speaker 3: Do we start discussing safety that is our number one value? We're very concerned about safety, about being able to deliver and create a strong value, but always maintaining the highest degree of safety standards in the industry.
Speaker 3: As you well know, we're quite well positioned in terms of comparison with our peers, but as the results of 2022 show safety is always a substantial challenge. We have to be continuously looking for safety metrics and ways of improving and reducing the impact of...
Speaker 3: incidents and occurrences that happen within the company. We have the ambition of zero fatalities, unfortunately, in 2022 we had five fatalities on the course for operations. So we're, of course, very sorry about that and focused on improving our safety conditions so that we're always performing better and more focused on delivering our results with Next, please. So starting with the ESG.
Speaker 3: intensity of our refineries.
Speaker 3: And of course the overall carbon intensity of our operations. It's always important to remember that the pre-salt oil and we highlight of course the PNBusius fuels in which we have between 9.5 kills of CO2 per barrel equivalent of emissions. It's quite competitive. It's...
Speaker 3: one of the top notch frontiers in the world. So we're very glad with the results that we've been finding and focused, of course, on continually improving our reducing our carbon footprint and also on delivering substantial technology to help that happen. We bring forth our commitment with the targets that we set for carbon intensity for 2025 and for 2030. And we've been able to comply with all the targets that we've been setting.
Speaker 3: to continue to challenge ourselves in terms of the future results. Next, please. Looking at our absolute emissions for 20-22, it's important to highlight that we had substantial decrease in total operational emissions when we compared to 2021. We should remember that in the end of 21, we had the hydro crisis in Brazil that made us have a substantial increase in terms of our plants generation, increasing the consumption of natural gas and of course increasing the operational emissions. So that impacted substantially 2021. As you can see, it was mostly an outlier. And we have managed to continue the...
Speaker 3: the downward trend that we have for total operational emissions. And also when we look at the oil and gas operational emissions, we've been continually reducing our oil and gas operational emissions basically since 2008. And we can see that that downward trend continues to happen and we continue to be focused on improving our results in terms of lower emissions next place. Looking at the carbon capture results, as you guys know, we have the largest offshore carbon capture problem in the world.
Speaker 3: Since 08 we've been able to to to range act about 41 mid and tons of CO2. For 2022 we had about 11 mid and tons re-enjected. It was the best results that we had and reinforces our commitment and our capability to deal with carbon-intense reservoirs, range acting and having a lot of technology to to support that process and to reduce the carbon footprint of the pre-sold oil. Next please. Also in terms of climate, right highlights we also reduced.
Speaker 3: I can't nominate it as one of the members of the Dow Jones Sustainability Index. It's always a very important achievement. We do have targets for the executive teams to maintain our presence in the index. It's an important.
Speaker 3: external acknowledgement and it's relevant to highlight that we've got top marks for environmental reporting, social reporting, water related risks. We also stewed out in terms of operational equfficiency, labor practices and human rights as well. It was a second consecutive year that we're part of the index and we're very glad you have achieved that result once again. Next, please. In terms of governance, it's important to highlight that we continue to...
Speaker 3: join our efforts in terms of digital transformation and governance risk in control. So we have a strong internal controls automation process that is ongoing. We already have more than 30% of internal controls automated and we continue to be to be to be focused on on on on increasing the level. We're one of the best performers in the industry. We have also been certified by the digitalouch data.
Speaker 3: join our efforts in terms of digital transformation and governance risk in control. So we have a strong internal controls automation process that is ongoing. We already have more than 30% of internal controls automated and we continue to be to be to be focused on on on on increasing the level. We're one of the best performers in the industry. We have also been certified by the Director's Morote at Eventlance Consultation Foundation at whilst in service for an older-???
Speaker 3: But it that that follows the SOE is in Brazil once again with the with their top tier governance certification. We have also updated our code of ethical conduct that is one of the most important guidelines that we have. We have that in our website. Any guys can check as well. Also we have been awarded in terms of transparency of our financial statements once again. And we've recently approved now in January 22, 23, our tax policy that reinforces our commitment to fair taxation, transparency and also accountability. We have alongside with the financial results for the year we have also released our tax report yesterday as well. I welcome everyone to look at it. We have important.
Speaker 3: reports in terms of the company contribution to Brazil, into the Brazilian society as an important taxpayer, and how the contribution of the company to several different Brazilian states is also quite relevant. Next, please. So in terms of tax payments for 2022, we have paid 279 bidon highs in taxes for 2022. We also paid 72 bidon highs in dividends to the controlling group, to the federal government, and the federal government related, and it is also important to remember that more than 60% of our cash flow generation returns to the Brazilian society, including taxes, and also dividends that we paid to the...
Speaker 3: to the president, say, as the company is a controlling shareholder. Next, please. As I mentioned in the beginning, our focus on project management and our solid project implementation governance has been delivering substantial results over the course of the last years. In 2022, we had the startup of FBSO and about an AmeriField. We have also anticipated the 71 that was expected to just start production in 23. We started production in the end of 2022 in the ATAPO field. Also, we reached the full production capacity of B68 and the babygum in the end of the refutes.
Speaker 3: And we've been achieving important results in terms of efficiency in the new protection units that we've started over the last couple of years. We also have FTSO and Ananadi that has arrived at the Marling field. And we also have Aminach Bahu and Anitagari Bahu are arriving at the shipyard in Brazil. So when we look at the units that are expected to come online in 23, we maintain our forecast that we expect you to have all the four units that were expected for 23 coming online.
Speaker 3: We have also done the contracting of three own platforms for the BUSIOs field. Very important result in terms of continuing with the development of the BUSIOs field and have also initiated contracting for other relevant FESOs like Bacquadas, Riviera, Tapu Dois and Tapu Choo and Sepia Choo. As you remember, we have 17 units coming online and the course of the business plan and we're continuing to be highly focused on achieving that substantial challenge. Next, please. So looking at our key financial highlights for 22.
Speaker 3: Several of the metrics were Petra's best historical result. We had very solid Abidine $22, $66 billion, $50 billion of cash flow from our operations. Our highest net income ever, $37, $36.6 billion. During the course of the year, we've paid about $3 per share in terms of dividends. During the course of 22 on a cash basis, we have also been able, alongside with creating and distributing value, we have also managed to keep our...
Speaker 3: capital structure, close to what we think is optimal. We reduced our net debt by $6.1 billion when compared to 2021. We have also reduced growth stat. As I mentioned before, 279 billion has paid in taxes over the course of the year. And also another important milestone with reached double digits return on capital employed for first time for very, very long time. And it's an important result of the focus on value creation and profitability of the relevant projects that we've been implementing over time. And as I mentioned in the beginning, the highest incorporation of reserves and history of the company, 2 billion, various of our equivalent incorporating the earth to next place. And so, I think that's a great question. When we look at production KPIs, we've more than delivered.
Speaker 3: over the course of 22 is also important to highlight that alongside with delivering record levels of 10 ppmd so we were also able to maintain competitive prices aligned with the international market over the course of the year. You guys know that it was a very challenging year, the racial crane war. Substantially in fact that the cracks spreads, they were quite volatile over the course of the year.
Speaker 3: So we were also able to maintain the healthy competitive environment in Brazil without passing through all the volatility that was seen in the international market. We've also had record of patents registered in Brazil for the second consecutive year. The company has more than a thousand active patents focusing on innovation and being able to create value with our innovation system. I've already mentioned the startup production of P71 FDSO, one about it and the full production capacity of P68.
Speaker 3: In terms of our portfolio of natural gas selling contracts, we have been able to diversify and to improve the benchmarks of our contracts. You probably remember that we had important impacts on Q421. And since then, we've been improving the quality of our natural gas commercial portfolio by indexing more and more contracts to crude and to spot prices of natural gas such as the JKM. So basically we had, and we're going to talk a little bit about this later on, very solid results in the natural gas segment as well, coming from...
Speaker 3: But even though those topages were successfully handled during the year and we delivered the high seditization factor in the last five years, 88% of the utilization with healthy margins and optimizing the use of our refiners, so it's a very healthy and sustainable result as well.
Speaker 3: And again, the important results we will perspective the Dow Jones index. Next, please.
Speaker 3: Of course, we had a positive and external environment in 2022. We saw much higher prices when we compared to 2021, but it's always important to highlight that we have seen similar.
Speaker 3: crude prices in the past and the results that the company achieved were completely different from the results that we've had now. So it's important to highlight that the results that we achieved in 2020 are also substantially associated to an important management process that has happened.
Speaker 3: And with the important turnaround story of the company over the last six to seven years. So basically we've had very important and very solid results in 23 in 22 sorry and when we compare the Q4 with Q3
Speaker 3: We have lower-branth prices in Q4, so that's going to show up also in terms of the financial results for the different segments. Next, please.
Speaker 3: lower brand prices in Q4, so that's going to show up also in terms of the financial results for the different segments. Next, please.
Speaker 3: Also, very solid EBDA for Q4, $14 billion. When we compare Q3, we had lower prices and lower margins. We're going to talk about that. An important aspect is that the results were fighting line with what was expected and being able to deliver solid and predictable and stable results is also one of our main targets. The main difference between what was expected in terms of results and what we deliver was basically related to non-cash expenses that are very difficult for the analyst's community to forecast such as the write-offs of exploratory expenses. We've advanced.
Speaker 3: with the development stage of the SAP area and some of the exploratory wells that were driven past were written off in Q4. We also have provisions for legal contingencies that are also very difficult to forecast. So I think that apart of those one-offs that we don't consider non-recurring because they always have, they always potentially impact the company's results.
Speaker 3: The results were quite consistent with what we've been delivering over time. Next, please. In terms of the results for business segment, we highlight the end of the upstream segment. We have, we've had an important impact of the lower brand prices and also, as I've mentioned, the non-cash write-offs of exploratory costs that were capitalized. We also had...
Speaker 3: solid results in the downstream segment as well. Q4, in Brazil we really have lower diesel sales because of this is anality. It's partially offset by higher gasoline sales and it was also partially offset by higher exports. But Q4 is important to highlight that as we've been managing the company's pricing policy in the pushing wave naprawd?., ?????ars announced interviews about the Syring enterprise they're just beneficial.
Speaker 3: to international markets. I still with positive margins, but closer when we compare two to Q3. So we of course managed to keep our prices aligned, but we had lower margins when we compare Q3. And in terms of the guess and power segment, I've already mentioned that we had important impact in terms of improving our contract mix.
Speaker 3: But we had no recurring gains that were recording Q3 and that reduced the comparison between Q3 and Q4. But when we compare Q4, 22 with Q4, 21, we already see important results of our improvements in terms of commercial policy for our natural gas contracts. Next, please. Thank you.
Speaker 3: Looking at our cash flow generation, $15 billion of cash flows from our operations. Interesting to see that companies paying income tax once again. We have used all the income tax credits that we have from prior periods where the company incurred in losses. Basically, we also had $10 billion of investments over the course of the year.
Speaker 3: We can see that on Q4 we had important impacts of advancements for the new platforms that were contracted, but we also see a ramp up in terms of investments for Q4, especially considering that.
Speaker 3: When we compare 23 and 22, on 23 we expect to invest $15 billion compared to $10 billion in 22, so this 50% increase has already reflected in terms of a ramp up of investments for a change forases for 122.
Speaker 3: after the investments and the cash inflow from the transfer of rights, transfer of rights, surplus auction, we had $52 billion of free cash flow in the year. This was basically used.
Speaker 3: to maintain our capture structure at the optimal level and to distribute the value that we've created to the Torscher holders. Next, please.
Speaker 3: Looking at our leverage, as I mentioned in the beginning, we reduced the gross debt from $59 billion to around $54. This was already expected since we have FBSOs coming online in 2022 and we expect our leverage to increase accordingly. So we...
Speaker 3: the leverages is expected to be kept stable. Next, please.
Speaker 3: In terms of port photo management, we've highlighted the transactions that were closed in Q4. Basically, the human and six refineries, the own shortfews of Kahmopolis and Papateha offshore. And also about quite a lot in those directions.
Speaker 3: Q4. As I've mentioned, we had lower print prices, lower margins on our products as well. We also had our business plan that was released on Q4, so we update our forecast and we had some impacts in terms of impairment of assets over the course of Q4. Nothing that
Speaker 3: jeopardized the companies and results are or concern in terms of future results. And this was also partially offset by financial gains coming from the SAP Yata Point Boosts transfer of rights options and also from the depreciation of the...
Speaker 3: and period, uh, President Haile, uh, that impacts favorably our financial result. Next, please. Uh, so in terms of dividend payments, uh, the executive board, uh, proposed to the board of the director as the payment in tune installments of 1.37 highs per share, total 2.75, uh, uh, this is basically, uh,
Speaker 3: the 60% of free-gashful formula and the distribution of the remaining part of the net income of 2022. The board approved the suggestion of the board of directors approved the suggestion of the executive board, but also...
Speaker 3: recommended to the shareholders, the creation of a statutory reserve to retain 50 cents per share, 50 cents per share in the highs. And also, if the shareholders do not agree with the suggestion that was made by the Board of Directors, they've suggested that the dispayment of 50 cents per share occur by the end of 2023. Next, please.
Speaker 3: So here I conclude my presentation once again, thank you all for being with us today for our earnings call. I'm very proud of the results that we've achieved once again, thanking and congratulating my peers at the executive board level for the important work that they've done over the course of the... the... the... the... the...
Speaker 3: the last two years that we've been together and also thanking all of the investors and shareholders for the trust that you gave us over the last two years. And I'll pass the floor back to Tukala. Hildedy, the wall can move to our Q&A session. And the first question that we receive, come.
Speaker 1: from Bruno Montanay with Morgan Stanley , Bruno also sent us a message. I'd like to give you a very warm welcome to Mr. Jean-Paul Pradges and hope that the Thoroughby's can perpetuate the governance standards, design and strengthen over the past years.
Speaker 1: So the first question is for you. It would be great to hear your thoughts about the company's fuel pricing policies. How do you think that Nebraska and balance its financial targets and its social role in Brazil? Can the import parity policy be sustained? It's still on the topic. I understand you are a strong supporter of the creation of a few civilizations.
Speaker 2: cannot speak as a policy maker or a minister or as a legislator anymore at my new position.
Speaker 2: The fuel stabilization fund or account was a proposition made in a crisis period, in a very critical crisis period of the last, the latest heights of oil and gas and fuel prices worldwide and also in Brazil.
Speaker 2: especially in Brazil during electoral period, et cetera, et cetera. I still believe it would be a part of the solution. It's not the whole solution when you talk about government policy, about sectorial policy, about economics, micro-economics in the country.
Speaker 2: So this would be to the Congress to decide if this is part of the solution. If that bill of law that is still in the Congress was approved and Senate wasn't to go, went to Chamber of Deputies and is there still for voting. If that can be enhanced.
Speaker 2: or should sleep forever, whatever. But in terms of import policy and in terms of what Petrobras would see as pricing policy, again, I should emphasize what I always said to the domestic market, to the press in general here, even before being where I am.
Speaker 2: Petrobras sells fuels, majorly in the Brazilian market. So it has to go with the best, the more competitive, the more if necessary aggressive, policy of price and commercial terms.
Speaker 2: as it can make effective to retain its market shares and its position. Wherever it wants to stay or whatever it wants or understand us important to be in the Brazilian market mostly. So it's not up to us.
Speaker 2: to command to lead to strongly suggest or anything like that the pricing policy for the country We have to deal with our own policy with our own clients with our own markets of selection or preference and this is what basically what we will do
Speaker 2: We can help in government policy, we can give suggestions, yes. We can participate in study groups for that, yes. No problem with that, as any other company would do. Through entities directly, but our role is to take care of our own policy, and this is what we would do.
Speaker 2: The important policy is the best price for our competitors. It's not necessarily our best price. We have refinements here. We compete in different conditions because we can. And if we need to use these weapons, if we need to use these...
Speaker 1: strategies or tools, we will use them. I think that answers pretty much the question right now. Thank you, Jean. The next question is also for you. And it's about temporary taxation of IOT sports.
Speaker 1: Do you see risks of such tax to become permanent in the industry? And even if temporary, does it jeopardize the investment climate in the oil and gas industry, especially on foreign direct investments?
Speaker 2: Look, I think especially when we are oil companies, we have to be resilient and accustomed to government rules, to changes in perspectives, especially when we have changes in my elections, democratic elections. So the rest are there.
Speaker 2: Now, days, I would believe that the risk is more on the government side than in ours. I think the risk of not having disapproved, the risk of not having enough votes to pass this temporary tax.
Speaker 2: I believe the origin of this is in the issue of the reestablishment of taxes in gasoline that was recently discussed. So it may have been used as a type of compensation or temporary compensation for that kind of
Speaker 2: the division in the timing of the of the of the taxes to come back. They divided it to two periods, 75% of the burden would be coming back at first time and the rest of the of the burden would be delayed. So this this may have been born as a compensation for that.
Speaker 2: But for us, we have to deal with it. We're not necessarily in favor of that because even in Congress, that was clear, myself and the company. That's a position that we are mutually understanding about that. In Congress, this was not an initiative that I...
Speaker 2: which is to get support to have this approved. I prefer the expectation of inducing domestic market or domestic sales in other ways. And also there are certainly other ways of for the oil sector to contribute with the state government. The contribution of Petrobras in the last year, for instance,
Speaker 2: which was pretty much high and maybe a record. 280 billion reais were paid in tribute in general, not only taxes, but also tributes regarding the concession agreements.
Speaker 2: In dividend 70 billion heyes, that's to 35 billion heyes, which in dollars translates around 63 billion dollars in one year contribution only by Petrobras to the Brazilian state and similar entities.
Speaker 2: state governments, municipalities, etc. This export tax will represent around $9 million per day, maybe 120 days, $1 billion. So it's kind of disproportional. So it's maybe...
Speaker 2: much more an interest of the government to compensate what I said about gasoline taxes rather than a consistency, a consistent policy to tax exports of oil.
Speaker 2: But if it becomes by any chance, we will have to understand the reasons and we will have to deal with it. Remind me that we should remind that we are exporting at this point 1.3 million dollars a day. And we need to do it sometimes, maybe not everything, but we need to do export somehow.
Speaker 2: And other companies export much more in us. At this time, if I'm not mistaken, we have around 65% of the exports of oil in the zilla from other companies rather than Petrobras. So this is the interest of other companies as well to deal with, to discuss with the government and to anyway to survive with this or no. Thank you, Jean. The next question.
Speaker 1: price in policy in the spot line. The company reduced prices this week, very remains aligned with international parity. This persuades intent to change the way it prices products in the domestic market.
Speaker 2: If so, what would be the conditions that this new price policy would need to meet? Yes, I think I pretty much started to answer your question before, but one expression you use is very important to enhance. International parity is one thing.
Speaker 2: Import party is another thing, they are very different. I believe nobody is crazy enough today in the world, being big and oil and gas to get out of international reference.
Speaker 2: That is pretty much impossible unless you are a big exporter and you have a small market at your country and you want to give gasoline or diesel almost for free for other reasons in the country because you have so much to export that it doesn't make any difference for you or you are a state company that are not aligned or doesn't need investment partners from the private sector. Otherwise you have to be consistent with...
Speaker 2: whatever happens in the world with the commodities related to oil and gas.
Speaker 2: being said, that being said, in Brazil for the domestic market, import parity, which is the part from outside, the price from outside plus the freight and all the costs to put this at the door of our refineries. This price to me, this is my, this price is the best price for our competitors.
Speaker 2: not necessarily for us. Maybe the maximum you can reach in a market where you're not disturbed by your competitors. But once you are disturbed by any competitor, we must move. And we must use our competitiveness, our investment which was made here and has to be paid and remunerated, which is our refineries.
Speaker 2: our domestic logistics, our competitive advantages in being the leading company, not the monopolistic, not a gemonic, but the leading company in Brazil in the market sector of fuels. So we will operate at our best domestic market price, the most competitive price per region, per point of delivery, per good client or even bad client. Well, we need to do price depreciation for that. That is...
Speaker 2: Tetrobras policy of price. It is not a government affair. It's a company affair And this is up to us to decide another thing is the government to decree anything different from that That may help that may happen in two levels
Speaker 2: the government. If whatever command is given, if that is viable, if that is suitable for the company, what are the consequences of that, but I don't believe we would have a problem with that. We will practice again, we will go back to practice the best domestic price for our projects, for our products.
Speaker 1: using all our tools to be the most competitive, most attractive price to our clients. That is our policy. Thank you, Jean. The second question from HES is also for you, and it's about strategic priorities. What are impressions of these first few weeks leading petrobrats? It is possible to outline what the new management strategy priorities will be for the company.
Speaker 2: which aspects of the current strategic plan should be maintained and which should be revised? I'm not coming back for coming to Petrobras for the first time. I'm returning to Petrobras. I know the company I was here almost more than 30 years ago in the end of 80s, beginning of the 90s. So this is a return for me.
Speaker 2: the return to the company and to be back with this exceptional staff, technical, managerial teams, the workforce in general puts in me and in them, I think, great expectations with the great pride and great energy to deliver great news for you guys and for the Brazilian people, for our consumers, for our clients in the near future. We will discuss the new strategic priorities together, including with you guys.
Speaker 2: which are managers of the money of our investors. So we will do these discussions openly, transparently, certainly in a big company like this, we don't give big switches. So we do have things in the current strategic plan that will stay there. I would say the majority of them. But we will have our own suggestions as well to implement. And we will discuss that together at the new time.
Speaker 2: We will start this after the stress of these first weeks. We are establishing our teams. We are changing the board of directors. We will have changes in the board of administration and the facility at the instruction. So it's think at the time we already have the teams together.
Speaker 1: Thank you Jean. The next question comes from Luis Carvalho with UBS, he also sent us a message. Firstly, I would like to congratulate the company's management and team on the solid results. We also would like to congratulate Mr. Praches and wish you good luck in the new role.
Speaker 1: Thank you Jean. The next question comes from Luis Carvalho with UBS, he also sent us a message. First we would like to congratulate the company's management and team on the solid results. We also would like to congratulate Mr. Praches and wish a good look in the new role. The first question from Luis is...
Speaker 2: SEO, how to avoid conflict of interest between the control issue holder minorities, politicians and the company best interest in the decision making process. Luis, first of all, try to change the orientation. You're the cell guy, cell guy, change that. Well, I think the challenge here and this question is very good because it's very common, Luis. Because of the recent past and the not so recent past as well, it is fair to have this kind of impression or conclusion that Petrobras will be subject to politicians and so on. Not that it was not subject to this in the recent years as well. We have to remember that.
Speaker 2: We had very recently, 2019, 2020, politicians and government making Petrobras to surrender market share in fuels and leaving refineries at half of the capacity. So this is not something that doesn't happen here and there. Now the big challenge that we have all together is to turn the participation of government in Petrobras into our favor, not against us. Make our investors have the certainty that to be a partner of the Brazilian state is not a disadvantage.
Speaker 2: on the country. It's good. It gives us good leads to things. It gives us good dialogues and less risk when we go to a new area, to a new horizon, when we discuss legislation regulation, when we are present in the regions, when we have to deliver new projects with the communities, with the mayors, with the city councils, et cetera, et cetera. This has to be an advantage since it's a reality and it's not going to change. If somebody doesn't want to be a partner of the state of Brazil, it has it has other options. People have other options. Then you will be right to say sell. But
Speaker 2: Right now, right now, this is a reality for us. And it never changed, it didn't change on the Lula, on the Dium, on the Bolsonaro, on the Tamer. And it will not change with Lula now, for sure. So Petrobras will still have the Brazilian state as a majority partner. That being said, we have to deal with that reality the best way we can. So this is part of our business. There are other companies have other vicissitudes. They have other problems. They have other natures. They have other difficulties. There are companies that are in oil and gas in countries that have no oil and gas anymore. Can you think of a problem bigger than that? You have to deal with foreign governments every time to increase your reserves. So let's kind of think out of the box a little bit and see advantages and not only did advantages.
Speaker 2: And deal whenever they are in the advantage deal with them go frankly and talk to the politicians to the government to the president and say this is not policy this is not good for us. This is not good for petrobras. Let me take this another way of doing this. Let me give you part or the entire result that you are expecting in another way with my investors with my functioners with my workers with my team I will bring something different but with the same result or almost. So this is possible. I believe that. Thank you Jean. The second question from Luis is also for you.
Speaker 1: So there has been a lot of comments on what Petrobras focus will be, particularly with non-core investments. What is, in your view, the optimum portfolio for Petrobras? If we could list a few potential options, you should see the company venturing to renewable power generation of show wind, fertilizers, biofuels, few distribution, new refiners, or some other sector. Is there a target in your consideration of how much this could represent of the company's future investment plan? Luis, one thing is not to be in the energy transition or...
Speaker 2: So upstream oil and gas will keep being our main focus.
Speaker 2: And this represents already 83% of our investment portfolio. So it may stay about back. I could try to guess, and this is my responsibility individually, that we would not in the short term, not even in the mid term. That is my responsibility in the short term. This creates a relatively short term, what principles...
Speaker 2: Go over 20 to 25% of that amount in investments into other things, including refineries transformed into biorefineries or natural gas into new segments, but also on offshore wind or bio whatever components in fuels, etc. Renewables in general. This will not be a transition that will make very fast.
Speaker 2: but certainly has to be a transition that we effectively have to be done doing. We cannot stop one day to think about the energy transition. That doesn't mean that we are going to do the transition, all of a sudden. There's a big difference between these two things. We will look at a way of putting more bio components into our refinery, yes.
Speaker 2: That is the fastest way of merging the oil and gas industry or the traditional conventional oil and gas industry into the future. We will search for new segments for our natural gas production. Yes, because burning natural gas is part of the energy transition. It's better than burning diesel or burning fuel oil or burning coal. It is better. We are evolving doing that for the humanity for Brazil for itself. And we know how to do it. We can fuel trucks in Brazil instead of diesel with natural gas. We will go through that path.
Speaker 2: And also we can evidently go to operational fields that are similar to ours in oil, but to generate from renewable sources. That is the case of offshore wind. That's why we quote offshore wind as an example of that. So it's not, it's natural for Petrobras being the offshore company that it is to go offshore for wind. Even it's much more simple to keep a wind mill in the middle of the water offshore than doing dynamic position and standing a platform, millimetrically precise stocked in the high seas of Brazil. So it should be something natural for us. Fautilizes, we will have to analyze petrochemicals, we will have to analyze.
Speaker 2: They are not in the strategic plan big time right now. We will go and revisit the circumstances of the Brazilian market for that. And we will see how we can contribute with our raw materials to that. But the certainly petrochemicals, bio-petrochemicals with gas as well, is something we have to reflect about because the oil era will start ending by the transportation sector. And the final phase of it will be petrochemicals. So we can also prolong our flow, our cash flow in oil and gas business through that segment. But this is something we will have to confirm with all our open and transparent discussions that I just mentioned. Thank you Jean. The next question comes from Frank McGame with Bank of America Mirror Lynch. And the first question is for you. Petrobras is expected to continue to...
Speaker 2: because they believe companies are an excellent vehicle to multiply their their their their monies with something interesting being done for the society, for humanity and for the countries or for the markets they are interested in. So I believe the of course this is this may be sounding very obvious, but this is what sometimes people doubt about when they ask these questions to to to the new government.
Speaker 2: Solid projects, excellent and recognized partners together, and that's very important for us in the transition, the energy transition because we made it the best company in oil and gas offshore and etc. But we are not necessarily yet recognized as the best company in other things. So in order to go into these new frontiers we may be well accompanied by pair companies, not different companies, not smaller than us.
Speaker 2: but companies that are the same level doing the same type of quests into the future than us. And we above all, as I said already, we should continue doing what we know at best in our core areas. Because this is as essential as the transition. And more than that, this is a condition for the transition. Otherwise, we don't know to do anything else than getting oil out of the deep waters, and other deep waters of Brazil, for instance, or of the equatorial margin. So we have to get more emphatic and get focused in what we know what to do to get good results and reinvest part of that at least in new areas to keep being alive for the next 70 years. This year, we are celebrating 70 years of better rest.
Speaker 2: I want to deliver a petrobras when my term is ended, whatever it is, a company that has the certainty that will exist into 70 years ahead and not become a company that is evaluated like a startup, a garage startup. Petrobras is Petrobras. It's a huge vehicle of investment. And investors should look at Petrobras as a secure investment. It may be not the high hit of every day in the markets, but it must be the most secure destiny of the money of our investors. The one that people can trust, the one can give, probably can give shares to their sons and and the grand sons. A company will be there in the future and will be following the tendencies and even the cutting edge technologies and activities of energy generation, energy production, energy distribution in any type in the near future and in the long time future.
Speaker 2: So that's what we expect. Thank you, the second question also from Frank and also our last question. It's also for you. Would the terrorists consider expanding in petrochemicals as a further expansion of its downstream segments? Why not? Maybe. Right now to be strict with the rules in general, I would say that I need to approve a new strategic plan. But nothing is ruled out. I mean, when you think about a new strategic plan, after looking at what the strategic teams have as historical and as a base to think about, as I mentioned several times here, we will talk to people. We will revisit some points. A bit of use.
Speaker 2: And they go back to petrochemicals, yes, there are some good opportunities in our screen right now. We have also fertilizers to look at. We have also international activities to look at. And I'm taking this from the company because I saw Frank was asking this in the Portuguese questions here. Talked about internationalization, I think, yes, why not? But we need to again, solid projects with good or excellent recognized partners will make us go through that. But we will have to decide all this under a new strategic plan that will start to discuss still. So we will need a little more time to be precise. But nothing is excluded except if something so so different that we never were present at or doesn't make at all part of our efforts of historic efforts. Or visions of the future. But things that were already in our portfolio, things that are complementary or supplementary to.
Speaker 2: the activity of oil and gas or into the site of the energy transition with what we have in hands offshore abilities, an excellent super research center that can develop several things and have already things in portfolio. All that will be used into the strategic plan. We will never do crazy things or things out of nothing. This will all have origins in the company, in the technical teams and in managerial decisions that will be taken talking to the investors and talking to our shareholders. Thank you, John . Thank you all. At this time, the Q&A session is over. If you have any further questions, you can send it to our Investor Relations team. Peter Brice, yes, for what we will now make his final remarks. Please, Rodrigo.
Speaker 3: Thank you. Thank you, Carla. Thank you, John . Thanks everyone for being with us today. Once again, for the results of the 44 of 2022. I'd like once again to congratulate and thank my peers at the executive board with the brilliant work that they've done and also on behalf of the executive board, thank all the investors and shareholders for having placed your trust in us as executives of the company and also would like to congratulate Carla for the brilliant work in conducting our earnings call. Thank you once again and have a great day. Thank you, Rodrigo, very much. And I'll pass the floor to the vice CEO , Jean-Paul Pratt. Please, please, John . Thank you, Carla. No, it was I just asked to have a...
Speaker 2: As much as we are saying that to also our workers, our workforce, these are two things that we will have to have in mind. Shareholders and workforce, they will help us to build this future. Thank you.