Petrobras CEO Says Green Energy Shift Means Caution on Blockbuster Dividends

(Bloomberg) — Latin America’s biggest oil company will be more cautious about issuing blockbuster dividends as it moves to become a renewable energy powerhouse, Petrobras Chief Executive Officer Jean Paul Prates said in an interview.

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In 10 years about half of Petrobras’s revenue will come from wind, solar and renewable motor fuels — and the company is gearing up to make acquisitions as early as this year to propel the shift, Prates said in a wide-ranging interview. The Brazilian producer also needs to spend heavily on oil exploration at home and abroad to guarantee that it will continue pumping crude for decades.

“We need to be cautious. Shareholders will understand,” Prates said from Bloomberg’s office in Sao Paulo, when asked about an extraordinary dividend payment. “I would be more conservative than aggressive. We are in the middle of this great decision of becoming an oil company in transition.”

Petrobras shares fell as much as 2.9% in Brazil, the most during regular trading since December.

Analysts see room for Petroleo Brasileiro SA, as the company is formally known, to reward investors with billions of dollars in extraordinary dividends, which are expected to be announced when it reports earnings March 7. Citigroup Inc. sees space for up to $7 billion, while Goldman Sachs Group Inc. forecasts as much as $8 billion. Petrobras was the second-biggest payer of dividends in the oil industry in 2022 behind Saudi Aramco.

Petrobras’s determination to plow ahead into clean energy contrasts with some of its international peers. European heavyweights Shell Plc and BP Plc have pivoted away from renewables to focus more on fossil fuels. US oil majors Chevron Corp. and Exxon Mobil Corp. never made wind and solar a priority and have focused their business plans on oil and gas.

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