Prepared remarks
Good afternoon, and welcome to Petrobras webcast with analysts and investors to discuss Q3 results. This will be in Portuguese with simultaneous translation into English. The links are in our IR website. Submit your questions through petroinvest@petrobras.com.br. Joining us, Clarice Coppetti, Director for Corporate Affairs; Cláudio Schlosser, Logistics, Sales and Market Director; Fernando Melgarejo, IR Director; Mário Spinelli, Governance Director; Mauricio Tolmasquim, Director for Energy Transition and Sustainability; Renata Baruzzi, Engineering Technology and Innovation Director; Sylvia dos Anjos, Exploration and Production Director; and William Franca, Product Director and other company executives. Fernando Melgarejo, our CFO, will take over now.
Good afternoon. Thank you for attending this webcast. These are the highlights for Q3 '24. We will be available to answer questions you may have at the end of this presentation. On to Slide 3. These are our operational highlights. Starting with exploration and production. We have come a long way. Back in October, we started the operation of 2 FPSO, Maria Quitéria in Jubarte field and Marechal Duque de Caxias in the Mero field in the Santos Basin. And we've also received Almirante Tamandaré. It's now in Brazilian waters and will be operating in the Búzios field. This is going to be the first high-capacity unit, capacity of up to 225,000 barrels and 12 million cubic feet a day. The plan is to start operations next year, but we may anticipate that these are very important deliveries for our strategic plan. In the case of Maria Quitéria, we've accelerated operations that were scheduled for '25.
This effort results in more revenue as these assets generate or reach their full capacity, which is over 500,000 barrels a day. You can also see other important highlights. Our record production in 2P reached 3 billion barrels. In Mero, the Sepetiba FPSO reached its peak production in less than 8 months. Additionally, we have discovered a field in Colombia and in South Africa. On to the next slide. Operational highlights include a high level of utilization of our assets at 95% for the quarter. In September, we reached 97%. We did this while maintaining high-value tariffs for byproducts. We've had the best historical level of greenhouse gas emissions in our refining operations. We've increased sales for byproducts in the Midwest and also partnered with Vale to test low carbon products, including diesel with 5% renewable content. We are ready to start commercial operations for our natural gas production unit in Rio soon.
This is very strategic for Petrobras as it will increase the offer of natural gas in Brazil. We're starting at 50% capacity, and by year's end, we'll have 2 modules in operation, reaching 21 million cubic meters of gas per day. After four years of being outside the top 10 ranking, we are back in the list of companies that talent wants to work for. These results are very important for companies like us that want to attract and retain talent. This is an indication that we're heading in the right direction. Moving on to financial results on Slide 5, we haven't had any nonrecurring items impact in this quarter, unlike the previous quarter, as you all remember. Recurring EBITDA was $11.6 billion. Recurring net income was $5.9 billion. We've maintained cash generation at $11.3 billion, a 24% increase quarter-on-quarter. Free cash flow was $6.9 billion. Gross debt is under control at $59.1 billion, within the range we established in our strategic plan.
More details about these figures will follow, and you'll see that financial debt is at its lowest level since 2008. We paid BRL 64.4 billion in taxes, and we've approved dividends and our capital interest at BRL 17.1 billion. So these numbers demonstrate that we've achieved consistent results despite the drop in Brent oil prices. This is the foreign scenario. Brent prices have decreased when compared to the previous quarter, much like the decreased crack spread in diesel, which resulted in reduced margins. However, we managed to offset this by selling more byproducts. On average, we see a devaluation of the real, but FX was BRL 5.45, which had a positive impact on our financial figures showing a 2% appreciation of the real in Q3 compared to the 11.2% depreciation in Q2 '24. Moving on to the next slide. This has impacted EBITDA in Q3, partially offset by increased oil production in the byproducts mix and due to higher domestic sales volumes.
Adjusted EBITDA was $11.6 billion, slightly smaller than the previous quarter when we had recorded one-off events. The net profit results reflect the FX impact and the fact that there are no expenses that affected the previous quarter. Our strong cash generation supports investments, financial obligations, and dividend payments. I would like to emphasize that we are investing $4.5 billion, about 30% more than in the previous quarter. This increase is due to scheduled payments of OLP projects and those related to new platforms in Búzios. This increase will not change the investment provision for the remainder of the year. Total investments amount to $10.9 billion. Before discussing the debt, I want to highlight the successful mission we conducted in August and September when we issued a 10-year bond, maturing in 2035, of $1 billion, which carries the lowest spread to the U.S. treasury bond since 2011.
At the same time, we executed a repurchase plan. Both operations align with the company's debt management strategy to help us reduce our leverage. Financial debt was $25.8 billion, the lowest level since 2008. Regarding dividends, we are committed to distributing the results generated and maintaining financial sustainability. Gross debt is under control, and the Board of Directors approved a compensation of BRL 1.32 per share. This will be paid out in 2 equal installments in February and March, and a JCP or dividends will be defined by year's end when we will have enough information to ensure the best tax advantage possible. On the last slide, let’s discuss the critical contributions of our taxes to federal, state, and local governments. This is just a portion of what Petrobras contributes to society. Additionally, we provide dividends to the government, and our strategic plans aim to generate high yields, contributing value for both shareholders and society overall.
Petrobras experienced a 14% increase in taxes paid compared to the same period last year, amounting to BRL 64.4 billion. In conclusion, I would like to turn it over to Eduardo so we can start our Q&A session. Thank you very much.
Questions and answers
Thank you, Fernando. On to the Q&A now. Please ask 2 questions at most. Matheus Enfeldt from UBS asks the first question.
Congratulations on the results. My questions are more on the operational side. Can you give us more color on the Q3 production levels? You had an expectation of better performance. Q2 had a negative impact of scheduled and unscheduled shutdowns. How much of this quarter, including pre-salt, was impacted by those shutdowns? Can we expect higher production from now all the way to 2025? What is the short-term prediction? And the second question is about exploration. ANP data shows that we had the least or the lowest amount historically. So what is the company doing thinking about explorations both in Santos and Campos basins replenishing reserves? Would it make sense to acquire companies abroad? Or would it make sense to consider acquiring companies that have a portfolio already in operation? These are my questions.
Thank you, Matheus. Sylvia will take those answers.
Matheus, I'll begin with your second question. You asked about the reduction in exploration and the potential in Bacia de Santos. It's always essential to remember that in 2006, we achieved self-sufficiency. The factor that enabled that was our capacity to increase production and replace reserves. That's our track. We see that we have our strategic plan for '27 and '28, with over $7 billion allocated to exploration. In this research project, we have significant oil potential that we are investing in. Yes, we are replenishing reserves in Santos and investing in new opportunities in existing fields while looking for new fields as well. This includes the Equatorial Basin, which has the greatest volume of prospection done since 2013. It is quite similar to the Campos Basin. The Equatorial Basin’s reservoirs and seismic characteristics are analogous to those locations—this occurs both in Venezuela and the more recent discoveries in Guyana and Suriname.
There is vast potential there, but we can only assess it by drilling. However, we need a license for that. So that is our primary line of investment. Your other question was about investments outside Brazil. As production increases, so does our need to replenish reserves. We are looking in regions with the greatest potential. We invest our efforts into places where potential is well established, and that includes conjugate basins in Africa, offshore. We also completed our acquisition in São Tomé and Príncipe this year and made an investment in another basin in Equatorial Africa. We are currently waiting for our license in that margin. There's immense potential there, but we will only confirm the extent once we drill. This year was atypical with scheduled and unscheduled downtimes. Scheduled downtimes particularly affected large-scale operations in Santos. To give you a sense of the impact: during scheduled downtimes, we ceased production of nearly 150,000 barrels a day.
However, these scheduled downtimes are critical for the safety and longevity of our units. Like a car, you need to stop periodically for inspection. Unscheduled downtimes occurred for various reasons, such as legal mandates or discoveries, and also due to labor strikes. The ANP agency in Brazil also ordered us to halt operations for a period. However, all actions remained within a safe margin of risk. In total, we encountered 2.8 million barrels, roughly 4%.
Thank you, Sylvia. Our next question comes from Monique from Itaú.
Congratulations on your results. I'm going to follow up on Matheus' question for Sylvia again. With regard to the unscheduled and extraordinary downtime, how would Petrobras classify the reasons behind this downtime? What were the main causes? And what has the company been doing in terms of processes to improve and reduce these unscheduled or unexpected downtimes? My next question is about CapEx. We've been discussing Petrobras over the past few months about a mismatch between the physical and financial advances in regard to the roadmap. And you always mention that there is an improvement process underway to better align the CapEx curve such that the mismatch will be reduced. So my second question is, could you please comment on how the CapEx projection refinement process is proceeding, especially with regard to future plans?
All right. Our first question will be for Sylvia and the second for Renata, but please feel free.
The unscheduled stops occurred due to maintenance reasons that we sometimes detect or when we want to implement new technologies, or due to actual maintenance. This year, we had several shutdowns mandated by the ANP. Remember that during the pandemic, many of our basins and units were not taken offline at all. We pushed through that period, so we are now focusing on addressing any and all ANP requirements to ensure the longevity of our units and all our investments. Our ultimate goal is to meet and clear all requirements made by the ANP.
Monique, I previously mentioned regarding the mismatch between physical and financial. We implemented improvements and, in this quarter, you can see how much we've accomplished. One of the reasons is that we've aligned physical and financial advancements. We did have a liability that we cleared out. We're confident moving forward that we'll accomplish everything we plan.
Thank you, Sylvia, Renata, and Monique for your questions. Our next question comes from Bruno from Goldman Sachs.
Congrats on the results. My first question is regarding the company's cash position. You've been operating with a cash position that is far above the $8 billion you place as a benchmark for what Petrobras would need for its stated operations. So my question is, do you have an intention to reduce that surplus cash? Is that a margin you intend to keep on your balance? My next question about exploring reserves asks about the equatorial margin. But what about the Pelotas location? Could you give us an update on that project's current status?
Thank you, Bruno. The first question is for Fernando, and about Pelotas that will go to Sylvia. Fernando?
Bruno, thanks for your question. The topic of cash available to the company is an interesting one because when we think about projects and the cash flow need, we evaluate every project from exploration to first oil taking anywhere from 5 to 7 years. Therefore, we cannot focus solely on a 3-month window, which is applicable to other companies with different turnarounds. We develop short-, medium-, and long-term views within our strategic planning that incorporates investment indicators and cash flow indicators. We assess how much of that will be net and how much will be used for our investments. We do not aim to hold surplus cash. Instead, we seek to allocate it to investments. Additionally, excessive surplus cash has a cost associated with it; the more surplus we have, the greater that cost. Currently, our surplus stands at $8 billion as you noted, and we are exploring various scenarios and alternatives to work with lower cash balances. I come from the treasury department, and I aim not to work with excessive cash. We will have a clearer answer on this by November 21.
Thank you, Fernando. Regarding the Pelotas Basin, in addition to the Equatorial margin, another area where we've invested in exploration involves the acquisition of 29 blocks, 26 in partnership with Shell and 3 more in partnership with CNOOC. We are currently acquiring seismic data, which is essential for exploration. It's a vast area—one of the largest we've ever worked with. We're already in progress, and we expect this acquisition to be completed next year. Following the seismic data acquisition, we will need to interpret the data, select regions, study the blocks, and determine drilling locations along with obtaining necessary permits. We've commenced the first stages of seismic data acquisition, although it is a promising region.
Thank you, Sylvia, thank you, Fernando, and Bruno for your question. Our next question is from Bruno from Morgan Stanley.
I have a follow-up regarding cash and shareholders and another one concerning 2P. Regarding shareholders, if there is enough leeway for a complementary distribution, when would be the timing for that? Would that be within this fiscal year? Perhaps shortly after the presentation or after the strategic plan? And what would be the approval method specifically? Will a Board meeting be called? How quickly can we expect that to occur? Regarding 2P, you mentioned that there is a decline phase. Is this occurring as expected with the 10% you mentioned, or has pre-salt proven to be more resilient compared to other fields like Bacia de Campos? Additionally, where would that production be allocated over the next few years?
Well, the first question about the compensation for shareholders goes to Fernando. Sylvia will address 2P. Fernando?
Bruno, how are you doing? Well, so far this year, it’s only natural to make a decision about extraordinary dividends once the strategic plan is ready while considering short-, mid-, and long-term volumes. We'll evaluate the distribution alongside the strategic plan. If we can meet the deadline of the plan approval by November 21, it's technically possible to distribute that within the same year by the end of December.
For 2P, our beloved giant, the results are better than the average. There's a production decline that is below 10%, much lower than what we've seen in the Campos Basin. We are embarking on the challenge of 2P Plus. We're currently at almost 1,000 barrels a day, and our goal is to reach 1 million barrels. The ambition for 2P is to compete with Búzios aiming to reach 1 million barrels per day next year. Thus, we are revitalizing 2P through additional wells, and we'll analyze all infrastructure for gas and water injection to rejuvenate those pipelines—potentially utilizing another platform. We want to minimize any production decline. We aim to avoid the situation seen in the Campos Basin, focusing on maintaining strong reinjection into our wells to lessen production decline.
Thank you, Sylvia and Bruno. Gabriel from Citi is up next. Over to you, Gabriel.
I have two questions. Let me return to the capital structure. We've been emphasizing minimum cash and gross debt but overlooking leverage. The outlook for the next year feels more pessimistic. I would like to understand your considerations about capital structure. What size of influence do you foresee? The second question pertains to investments. Given the stricter market for FPSOs and drilling probes, how do you plan to resolve this situation? How can Petrobras maintain flexibility to secure vessels in 2025? What would be the budget impact—around $9 billion? Is this the new investment level? Are these major units responsible for higher expenses than we've seen historically? What will be the inflation impact?
Thank you, Gabriel. Fernando addresses the first question, followed by Renata.
The cash ceiling for debt is discussed in our strategic planning cycle where we deeply analyze the company's capital structure to establish the ideal balance between equity and debt. The leverage level should align with the company's situation and our business plan, and it will become public during that strategic planning. Many factors will be addressed as this represents the most important report at year-end and can provide several answers. Our goal is to optimize the capital structure to strike the best balance between equity and third-party capital. We're assessing these issues closely.
Yes, Gabriel, you're correct. We've experienced difficulties leasing FPSOs that have delayed several projects. We've identified that these companies struggled to acquire lines of credit, hindering their capacity to present chartering proposals. Additionally, there were challenges associated with payments, as mentioned. We've adapted to a neutral cash flow model—there’s no financing in either direction, so it's a net cash flow. For upcoming platforms, we are not relying on that model. One alternative is BOT construction. The CapEx comes from Petrobras; the operation is run by our company initially, and the asset is later transferred to Petrobras. This approach encourages participation from broader bidding processes. As for prices, nickel is a top commodity that influences the costs of our equipment and pipelines. Back in 2022, prices for nickel reached $48,000 per ton, while today, they are around $16,000. Thus, we anticipate that these prices will likely decline.
Thank you, Fernando and Gabriel. Pedro from BTG is our next speaker.
I have 2 questions. What are the possible tax deductions in the upcoming quarters? This has begun to impact Q3 results. Can you provide color on how soon that benefit will be utilized? The second question is concerning the investment curve. Results will be announced during the strategic planning event, but could you share what the CapEx implementation profile will look like? Will there be a change in the allocation share compared to last year's plan?
Thank you, Pedro. Can you address both questions, Fernando?
Regarding the tax details, for Q3, our cash flow included positive impacts, notably savings of about BRL 4.2 billion through income tax and social contributions, mainly due to adjustments in our fiscal base. The remainder will be accounted for in Q1, roughly BRL 3 billion or $500 million. Regarding investments, we don't foresee major changes in terms of maturity; projects currently underway will continue to require significant resources even into 2025. Maturity levels remain in focus as our strategic plan aims to ensure we correctly allocate the necessary resources without major fluctuations from one year to the next.
Our next questions come from Rodrigo from Santander.
First, I'd like to revisit the topic of post-salt. I'd like to understand what the next revitalization regions are for '27 and '28. Can we consider how the company's production curve might look in those regions? My next question is a bit more complex; I seek your opinion on capital allocation, particularly relating to CapEx and M&As. How do you balance organic investments and initiatives such as the Namibia project?
Thank you, Rodrigo. Sylvia will address the first question, followed by Fernando.
Rodrigo, we'll start with your second question regarding CapEx and M&As. Our internal strategy is to refrain from commenting on specific projects, instead responding to inquiries in a broader sense. Whether they are organic or inorganic investments undergo the same governance process, ensuring they meet return requirements and resilience criteria for us to proceed.
In terms of post-salt and the Campos Basin, we aim to see significant recovery. We have 4 new units designed to replenish and renew post-salt basins. We are diligently working to add new production wells, expecting an increase in production of 200,000 barrels from that zone. Across the Campos Basin, the recovery level is relatively low at approximately 7%. However, we aim to maintain the post-salt cover's stability while working on upcoming wells, effectively making Campos our production benchmark as we expand to new regions. It represents a model we will replicate in Africa and the equatorial margin. Its success has helped propel Petrobras into a global oil production leader.
Thank you, Sylvia. Thank you, Fernando. Our next questions come from Jorge from Scotiabank.
Congratulations on your results. It's been a few months since the recent gas decree. How did that decree change discussions with the ANP regarding future projects? How did it alter Petrobras' outlook towards them? Second, with Brazil facing a deficit in diesel and current imports, how did Petrobras determine its supply strategies geographically and its distribution between small and large players? Is Petrobras leaning towards concentrating its relationships or opting for broader connections?
Thank you, Jorge. The first question will go to Mauricio, and the second will be addressed by Schlosser.
Thank you, Jorge. Regarding your first question, initially, we were apprehensive. Nevertheless, our current assessment indicates that it will only apply to new projects, not those already approved. We're anticipating the publication of the '25, '26 ANP regulatory paper so we can start discussions. We’re currently focused on the Senate amendment regarding the patent law, designed to mitigate market impacts on Petrobras. So far, our discussions have been quite productive. We've made considerable strides toward forming agreements that protect and preserve Petrobras' production while also managing GNL imports. We're also examining contracts with potential imports from Bolivia and Argentina, which have already been signed with third parties. We're committed to closely monitoring this agenda, and we remain optimistic about its resolution.
I want to clarify that we do not prioritize imported products for meeting the Brazilian market's demands. Since we launched our new strategic plan, our focus has been on leveraging Petrobras' assets, including refining operations and logistics, to capture that margin within the country. For instance, so far this year, 23% of the internal demand for diesel A has been met through various importing players, including Petrobras, while primarily relying on domestic production. Petrobras engages in imports as a complement to domestic production. Operational planning processes are what drive our decisions regarding supply geography; we employ computing tools and optimization to guide these decisions. A strategic array of options is always at our disposal, tailored to ensure resiliency and profitability in the face of market changes.
Thank you, Mauricio. Thank you, Schlosser. Our next question comes from Lilyanna from HSBC.
I have just two. The first is about reserves. What actions are you taking to ensure that the environmental license for the equatorial margin can be obtained as soon as possible? And regarding the Campos Basin revitalization, was that already included in the '24, '28 plan? Sylvia, you mentioned a potential recovery of 200,000 barrels a day. I'd like to know if that was already included in the strategic plan for 2.4 billion barrels in '24 to '27. Regarding reserves, do you plan to acquire already producing assets within the Campos area to optimize investments and recovery? Can you provide any insight into the scope or magnitude? My second question concerns downstream activities. How are the negotiations with Yara regarding fertilizer provisions going?
Sure. Thank you, Lily, for your questions. First, we'll have answers regarding reserves and the equatorial margin. Then William will discuss the fertilizer concerns.
Lilyanna, thank you for your question. Yes, we pursue reserves diligently; that is our priority. The Campos field is part of that strategy. We're trying to expedite the drilling of those wells to obtain the additional 200,000, and this initiative is indeed part of the '24, '28 plan. Regarding reserves' replenishment, the equatorial margin represents a sizable challenge. Our approach involves optimizing our current assets, while the major leap will come from new discoveries. As mentioned, the equatorial margin is critical due to its similarities with other basins; we can draw parallels to Campos in terms of both model and reservoirs. Significant potential awaits confirmation through drilling work.
Lilyanna, regarding our licensing efforts, Petrobras is making every effort to obtain the license promptly. The recent communication from Ibama was not negative; rather, they posed questions to our technical team regarding our proposal presented in early August. This proposal involves establishing another base for fauna protection under Petrobras in Oiapoque city limits, part of our licensing request for drilling in deepwater regions of Amapá. It includes a range of services, namely establishing a physical fauna protection facility, integrating various vessels and specially trained technicians focused on fauna protection. Our technical teams have been working diligently to allay Ibama's concerns, ensuring that we demonstrate our capacity to safely proceed.
Yes, we have initiated discussions concerning a nonbinding memorandum with the Yara fertilizer group. We're exploring several promising opportunities, specifically producing fertilizers from biomethane. Regarding the ANSA case in Paraná state, we anticipate resuming operations by May 2025, led by Petrobras exclusively without any partners for that aspect. However, we are still in discussion with Yara regarding future partnerships.
Thank you, William. Thank you, Lily, for your inquiries. Over to Caio from Bank of America.
First off, Petrobras has been discussing the potential internationalization of assets, particularly in Colombia and Namibia. How do you prioritize these assets while also considering the potential of the equatorial margin, the Pelotas Basin, and domestic assets? Can you explore all these fronts simultaneously? Or does one project take precedence over others once approved?
Thank you, Caio. Sylvia will address the first question, followed by Fernando.
None of those projects are in competition. We can invest in the equatorial margin, Pelotas Basin, and planned international projects simultaneously. We allocated $7.5 billion for exploration, including $3.1 billion for the equatorial margin and $1.3 billion for international projects. We have active drilling in these areas including São Tomé and Príncipe, South Africa, Colombia, Bolivia, and Argentina. These efforts exist harmoniously within our strategic plan, indicating a strong capability to navigate all fronts.
Thank you for the question, Caio. We've been evaluating our capital structure during these strategic planning discussions. This process helps give us insight into how we view the future. One of those aspects is examining our capital structure to find an ideal proportion of equity versus third-party capital. Once the strategic plan is announced, this will be one of the components addressed, whether we will maintain our current approach or adjust it.
Thank you, Fernando, Sylvia, and Caio for your questions. Regis from XP asks the next question.
Congratulations on the results. I'd like to revisit the topic of extraordinary dividends. Would the decision about dividends depend primarily on the cash position at the end of Q3? Will you make that decision based on realized cash flow or future projections? My second question is more straightforward: What is Búzios and Mero's current status for 2026? Can you anticipate, or is there any risk of delays due to licensing or workforce hiring? Lastly, what key projects are focused on the '25 and '26 time frame regarding the Campos Basin?
Sylvia?
Again, revitalizing Campos Basin remains a priority for us, with scheduled investments of BRL 22 billion for 2024 to 2028 that includes new platforms such as Albacora, Barracuda-Caratinga, Jubarte, and Maria Quitéria, along with our partnership with MC33 and Equinor. We have approximately 200 wells planned for that same timeframe. We project additional production of over 200,000 barrels in the short term by the 2025 to 2026 period.
Thank you, Sylvia. Fernando?
Regarding extraordinary payments, I want to clarify that this is a dynamic decision. We will consider the cash flow outlook at the start and our capacity to generate cash to maintain our operations, costs, and investments while fulfilling debt obligations. Analyzing the cash position at T-zero will not be the sole determinant. We have to consider both short-, mid-, and long-term aspects. Having worked in treasury, ideally, we want a streamlined cash flow but also to retain flexibility during stress scenarios, allowing us to replenish cash reserves if needed.
Thank you, Fernando. Thank you, Regis. Conrado from Safra has the next question.
I've observed that investments in renewables, wind, and solar projects haven't progressed as quickly as initially anticipated. Do you agree? And is this delay due to uncertainty surrounding those projects? Might this change your approach to catalyzing greenfield projects managed entirely by Petrobras? Additionally, regarding fertilizers, could you shed some light on the status of negotiations concerning the fafens in Bahia and Sergipe? Are you considering adopting a tolling model or is there room for other alternatives?
Thank you, Conrado. Tolmasquim will address the questions regarding renewables, and then William will touch on fertilizer matters.
Regarding renewables—wind and solar—this is very acknowledged. A state of oversupply was experienced up until recently within the energy sector; there were far more projects than demand, leading to lowered prices. Consequently, several projects were curtailed by government intervention, notably by ANEEL, and we are now witnessing a pickup in the economy, which is pushing prices back up again. Before endorsing a project, we must ensure it presents positive NPV, considering potential CapEx and possible partners. Currently, we have four companies negotiating on various fronts, seeking to initiate projects. While these initiatives remain, we may consider putting greenfield projects on hold in favor of exploring already operational projects where conditions normalize. Our goal is to find the ideal scenario before sanctioning anything.
Thank you for your question. We've been engaging with the Unigel Agro Group to explore several possibilities surrounding fertilizer production. It’s crucial that this generates a mutually beneficial scenario. Currently, we're looking at producing 8 million tons of urea, while our Bahia and Sergipe facilities can generate capacity between 1.5 and 2 million tons’ worth. Each proposition must be economically feasible and align with Petrobras' fertilizer strategy, so yes, we are actively discussing potential partnerships in that space.
Thank you, Conrado. Rodolfo from JPMorgan is up next.
Most of my questions have been answered already. However, there's one I’d like to pose. After engaging extensively with investors, there are growing concerns regarding oil prices. Although Petrobras has a notably low cost structure, I'd like to take this chance to ask how the company plans to tackle a potentially less favorable oil scenario.
Rodolfo, thanks for your question. It's important to underscore the resilience of our portfolio. Analyzing unfavorable scenarios, we consider a value of $45 per barrel. Even in this case, the NPV must remain above zero. Today, at 0.75, we have substantial headroom. We run extensive models to evaluate whether our plans align with these scenarios, which include drops in dollar prices as well. Our scenario analyses estimated that our yearly operating revenue might drop by $4 to $5 billion. The world keeps moving forward, and many factors are at play regarding aggregate value, but these scenarios are consistently monitored. Our resilience perspective is that $45 serves as a baseline, and we must pass that test.
Thank you, Fernando. Thank you, Rodolfo. We have just two more questions from Vicente from Bradesco.
I have two inquiries. I want to revisit inflation regarding equipment and service costs. Over the last year, we've observed increases of 150% in topside expenses, which is alarming. Today, we are in competition with Guyana, Namibia, as well as Asian onshore projects, thus emphasizing Petrobras' long-standing partnerships with extensive shipyards. How does this factor into our CapEx and inflation trends, particularly at the $2 billion level? My second question concerns Fernando's point about CARF, where you indicated an approximate $3 billion expected in the upcoming quarter. Would this include payouts to return funds to partners or shareholders?
We’ll start with Fernando's comments, and then Renata will elaborate.
There are two aspects to CARF. The first one involves reimbursing partners—initially, we projected BRL 2.6 billion. Out of that, BRL 200 million have not yet been recognized, leaving around BRL 2.4 billion acknowledged from June to September. Of that amount, BRL 1.9 billion are expected to become cash for Petrobras during the year, granting substantial reductions in income tax and other social obligations at BRL 4.2 billion due to reductions in our fiscal base. By the next round, we expect to see a $500 million fall, estimating $3 billion in Q1 '25. I want to note that for every $10 decrease in oil price, we face an operating cash drop of BRL 5 billion.
Indeed, Vicente, multiple factors contribute to the increase we’ve seen. They span from various complexities within our projects to looming inflationary pressures on inputs and feedstock. For instance, nickel prices soared—impacts stemming from the conflict in Ukraine. In the past couple of weeks, I visited projects in Asia and spoke with numerous suppliers—many expressed keen interest in resuming collaboration with us. We'll ensure our vendors work with Brazilian partners, a prerequisite we enforced through our MOU. We have been diligently engaging with the market while expanding our pool of partners to ensure everything is aligned.
Thank you, Renata and Fernando, and Vicente for your questions. With Vicente's questions concluded, we now end our Q&A session. Thank you all for your thoughtful inquiries that have enriched our discussions today. We enjoyed having over 1,000 participants during this webcast, enhancing the communication between us.
On behalf of Petrobras, I'd like to thank everyone for your commitment to joining us and for the technical inquiries you made. Our Investor Relations team is available for any questions. Thanks again for being part of this webinar.
This event is available on the Petrobras Investor Relations site, and we will shortly make available the audio and the live replay. Thank you to all investors. Have a great afternoon and a pleasant weekend. See you next time.