Financial Overview - As of December 31, 2020, Petrobras had 7,442,231,382 common shares and 5,601,969,879 preferred shares outstanding[4]. - The company reported its financial statements in accordance with International Financial Reporting Standards (IFRS) and presented in U.S. dollars[16]. - Petrobras is classified as a large accelerated filer under SEC regulations[9]. - The company has a market capitalization of US2,950 million to settle a consolidated securities class action related to the Lava Jato investigations[177]. - The company has substantial liabilities and may face significant liquidity constraints in the near and medium term, which could adversely affect its financial condition[146]. - The company’s credit rating is sensitive to changes in the Brazilian federal government's credit rating, which could affect its financing ability[149]. - The company may incur additional interest expenses as 41.9% of its financial debt consisted of floating rate debt as of December 31, 2020[153]. - As of December 31, 2020, 84.9% of the company's financial debt was denominated in currencies other than the Brazilian real, making it vulnerable to foreign exchange fluctuations[150]. Strategic Plans and Operations - The company has a strategic plan for 2021-2025, focusing on digital transformation and portfolio management[12]. - The company has a strategic plan for 2021-2025 to enhance its operational efficiency and market position[35]. - The company aims to enhance its exploration and production activities, including drilling and refining operations[20]. - The company is committed to improving its risk management policies and procedures[23]. - The company aims to enhance its market position through strategic partnerships and investments in new technologies[30]. Risks and Challenges - Petrobras is subject to various risks including fluctuations in crude oil prices and the impact of the COVID-19 pandemic on operations[20]. - The company has ongoing corruption investigations that may affect its operations and financial performance[23]. - The company is exposed to operational risks, including health, environmental, and safety risks, which may lead to significant losses and legal liabilities[89]. - The company faces competitive pressures in the Brazilian oil and gas market, which may impact its ability to implement its Strategic Plan[92]. - The company is exposed to financial risks due to the volatility of oil, gas, and oil product prices, which are influenced by global supply and demand conditions[141]. - Climate change poses challenges, including increased operating costs due to stricter environmental regulations and potential impacts on demand for fossil fuels[107][109]. - The company is exposed to risks related to pension and healthcare benefits, which may diverge from actual future contributions due to market conditions[156]. - The company may face additional complaints or claims related to the ongoing Lava Jato investigation, which could divert management's focus from core business operations[181]. Regulatory Environment - The company is subject to regulations by the National Petroleum, Natural Gas and Biofuels Agency (ANP) in Brazil[30]. - Changes in the Brazilian government's pricing policies could materially impact the company's business results and financial condition[145]. - The company is subject to evolving tax regulations, which may lead to disputes with tax authorities and could adversely affect financial results[188]. - Regulatory changes and differing interpretations may necessitate increased investments and could delay production, impacting overall results[192]. - Delays in obtaining necessary environmental licenses and permits may hinder the company's ability to meet crude oil and natural gas production objectives[194]. Market and Production Insights - The majority of proved reserves are located in the Campos and Santos Basins, which are expected to be the main source of future growth in proved reserves and oil and gas production[47]. - The refining capacity is concentrated in southeast Brazil, meeting demand through a combination of domestic refining and oil product imports[49]. - The company operates in eight countries besides Brazil, including Argentina, Bolivia, and the U.S., focusing on exploration, production, and retail services[55]. - The Exploration and Production segment covers activities related to crude oil, Natural Gas Liquids, and natural gas, primarily for domestic refineries[52]. - The Gas and Power segment includes logistics and trading of natural gas and electricity, as well as generation of electricity through thermoelectric power plants[58]. Environmental and Social Responsibility - Braskem is committed to sustainable practices, focusing on reducing greenhouse gas emissions and increasing the use of renewable energy sources[30]. - The company has a commitment to safety and environmental respect, employing over 49,000 individuals[41]. - Increasingly stringent environmental, health, and safety regulations may lead to higher capital and operating expenditures, negatively impacting project profitability[185]. - New air quality standards may require the company to adopt costly environmental control practices, potentially affecting operational costs and production capabilities[186]. Corporate Governance - The Brazilian federal government controls a majority of the voting shares and has the right to elect a majority of the Board of Directors[67]. - The Brazilian federal government, as the controlling shareholder, may influence the company's strategic decisions, potentially conflicting with the interests of other shareholders[199]. - Changes in elected representatives may lead to shifts in the company's Board of Directors, impacting business strategy and management[200].
Petrobras(PBR_A) - 2020 Q4 - Annual Report