Petrobras SWOT & PESTLE Analysis
COMPANY PROFILE -Petrobras
Business Sector :Oil and Gas
Operating Geography :Brazil, South America, Global
About Petrobras :
Petrobras is a Brazilian oil and gas Company that was founded in 1953 to engage in the exploration, production, refining and transport of domestic petroleum and petroleum products. The oil and gas titan is present in the exploration and production, refining, marketing, transportation, petrochemicals, oil product distribution, natural gas, electricity, chemical-gas and biofuels. Originally a state-owned monopoly, Petrobras became majorly owned by the state but competes with other Brazilian companies as well as against foreign companies. Petrobras also partners with domestic and foreign companies and operates in more than 25 countries around the world. It is the largest corporation in both Brazil and South America. Its headquarters are in Rio de Janeiro.The company operates numerous refineries in Brazil and other countries, and its service stations are present throughout South America. Through its petrochemicals division, it produces base chemicals such as ethane, propylene, and benzene. It also produces biodiesel from oilseed plants and is a major distributor of ethanol for use in Brazil’s ambitious gasohol program. The company’s strategic plan 2040 includes transversal strategies like Competitiveness, Cost Efficiency, Digital transformation, Partnerships, Culture. Petrobras employs around 63,400 people globally as of 2019.
Petrobras vision statement reads “An integrated energy company that evolves with society, generates high value, and has a unique technical capability.” Petrobras USP or unique selling point lies in enjoying market leadership position in Latin America as the company with the highest market value.
Petrobras Revenue :
Total Net Sales:
$95584 million – FY ended 30th Dec 2018
$ 88827 million – FY ended 30th Dec 2017
Ownership / Major shareholders :
As of April 2019, the major shareholders of the company are as follows –
1) Brazilian government (54%)
2) Brazilian Development Bank (5%)
3) Brazil's Sovereign Wealth Fund (Fundo Soberano) (5%)
Competitive Analysis of Petrobras
| 1. Growth in free cash flow 2. Strong global presence 3. Robust brand power 4. Growth through strategic partnerships 5. Strong divestment plans | 1. High debt to equity ratio 2. Major dependency on home country Brazil 3. Bound by legal obstacles |
| 1. New growth opportunities in technology 2. Expanding investment plans 3. Ramping production of natural gas and oil 4. Rising need for digitization | 1. Lava Jato Litigation 2. Threats to divestment plans |
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Strength
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Weakness
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Opportunity
1. New growth opportunities in technology: Petrobras has moved up to partner with R&D leader CSEM Brazil for printed, solution-based, solar generation. This partnership to collaborate on an R&D project will see investments worth USD 6.5 million over a 30 month period. The project is aimed at creating completely printed, carbon-efficient, solar films coated with very promising perovskite-based photoactive materials. Apart from this, for its internal processes the company is looking forward towards implementing block chain technology for trading, supply chain hiring process and compliance. Another area where the company is focused is digital transformation to improve drilling efficiency and operations. For example the company is exploring application of a project called Pressure While Drilling Analysis, a real-time data visualization platform which can be utilized to monitor pressure during drilling operations using data obtained by sensors installed on rigs. Some of its refining sites are also adopting new refining technologies with technological alliances with companies like Shell and ExxonMobil.
2. Expanding investment plans: Brazil’s Petrobras in its strategic plans has started to invest a total US$105 billion in the five years to 2023 as well as divest its assets worth US$35 billion. Petrobras has plans to invest $84.1bn in deep water exploration and production projects in Brazil. The company is also expected to divest $27bn through asset sales and partnerships by 2023. For production in the pre-salt areas around $69bn of the planned investment will be channelled. Other key focus area of investment include refining, transportation, trading, and natural gas and petrochemicals and the oil and gas behemoth is seeking partners for its refining, transportation and trading operations, as well as renewable energy businesses. The North-East and South clusters represent 40% of the installed refining capacity in Brazil. Hence the company plans repositioning in refining by means of partnerships in the North-East and South clusters, allowing for shared business risks and thereby strengthening the liquidity position of the company.
3. Ramping production of natural gas and oil: Brazil crude oil growth target is expected to touch 13% in 2019 and refinery market by 1.8% till 2030. Looking ahead to 2019 and beyond, it is expected to see production increase steadily, as a result of ramp up from both existing FPSOs, and new pre-salt FPSOs. Natural gas production is also expanding at more modest levels with a month on month increase of 1.2 percent and an overall annual growth rate of 1 percent. Keeping this in mind, oil production should grow by 24% to 3.2 MMb/d by 2022. However, Brazil will need to nurture the right investment climate to allow assets to come online through either future discoveries or new development plans. Since Petrobras is a major contributor to the Brazil economy and is dependent on the country, the company has to fuel up its investment in the industry accordingly to meet the global requirements.
4. Rising need for digitization: Economic and technical challenges in drilling operations are on a rise due to more and more extreme weather and geographic conditions, rising costs, decreasing quality of deposits. In this scenario, market growth as well as technological growth of companies will depend on the adoption of digital technologies and their new forms of work, collaboration and innovation. Real time data, Single platform to measure drilling performance, safety etc. are some of the key areas where digitization would play an important role in an industry like oil and gas.
Threat
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Petrobras Analysis Report
1. Petrobras Annual Report 2018 - https://www.investidorpetrobras.com.br/enu/204/RA%202018_english.pdf
2. Petrobras Company Profile - http://www.petrobras.com.br/en/about-us/profile/
3. Petrobras Sustainability report 2018 - https://www.investidorpetrobras.com.br/fck_temp/1030_5/file/Sustainability_2018_10_06.pdf
4. 2040 Strategic Plan and 2019-2023 Business and Management Plan - http://www.petrobras.com.br/en/news/2040-strategic-plan-and-2019-2023-business-and-management-plan.htm
5. Petrobras business and management plan - http://www.petrobras.com.br/en/about-us/strategic-plan/business-and-management-plan/
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Petrobras SWOT and PESTLE analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.
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