Petrobras to Join Oil and Gas Climate Initiative after Selling off Biofuel Assets

by Jim Lane (Biofuels Digest) In Brazil, Petróleo Brasileiro S.A. (Petrobras) is joining the Switzerland-based Oil and Gas Climate Initiative, whose member companies represent more than a quarter of the world’s oil and gas production. OGCI aims to speed and scale up initiatives taken by member companies to reduce the greenhouse gas footprint of their core oil and gas business and to explore new businesses and technologies.

But Petrobras has been selling off biofuel assets, like its biodiesel plants in Brazil and its eight sugar and ethanol assets in Brazil and Mozambique. And it has been lowering gas prices in Brazil putting pressure on ethanol demand. Is it contradictory to get rid of assets that would help GHG emissions and environmental impact while joining an initiative that aims to improve GHG emissions and environmental impact?

The OGCI’s existing members are BP, CNPC, Eni, Pemex, Repsol, Saudi Aramco, Shell, Statoil and Total.

Petrobras’ involvement with OGCI signals that they are taking GHG issues seriously and taking action to lower their environmental impact. By joining other big oil companies and sharing knowledge and collaborate on action to reduce greenhouse gas emissions, they are trying to improve.

According to Reuters, “With the settlement, it will pay out more than six times what it has received so far under a Brazilian probe into bribery schemes that involved company executives and government officials. The settlement…was an important milestone for the oil firm as it tries to emerge from the scandal that has entangled two former Brazilian presidents and dozens of the country’s corporate executives.”

Petrobras is quick to say in their press release, “The agreement does not constitute any admission of wrongdoing or misconduct by Petrobras. In the agreement, Petrobras expressly denies liability. This reflects its status as a victim of the acts uncovered by Operation Car Wash, as recognized by Brazilian authorities including the Brazilian Supreme Court. As a victim of the scheme, Petrobras has already recovered R$1.475 billion in restitution in Brazil and will continue to pursue all available legal remedies from culpable companies and individuals.”

As reported in the Digest in June 2017, Petrobras lowered gas prices for a second time that month, causing further pressures on ethanol demand. Despite hydrous ethanol prices being 68% of gasoline prices during the week ending June 10, the lowest since September last year, falling gas prices see drivers still choosing fossil fuels over ethanol. Hydrous prices have fallen 6% since the sugarcane crush started in April and by 3% during the past month.

Interesting timing, we think, as this is just months after divesting from ethanol.

It remains to be seen how exactly Petrobras will improve its environmental impact and how it will use the OGCI initiative after selling off the assets that seem most likely to improve GHG emissions over the last year. Maybe they will re-evaluate or reconsider biofuels in the future? Maybe they will continue R&D in the biofuel segment? We’ll be keeping an eye on this. READ MORE