PARETO
Petrobras (NYSE:PBR) unveiled a plan Wednesday to build as much as 23 GW of offshore wind power in Brazil, which Citi analysts said could require large investments that might hurt the company’s dividends in the medium term.
Petrobras (PBR) said it filed a request with environmental regulator Ibama to start the process of licensing 10 areas off the Brazilian coast for the deployment of wind energy, but it is unclear if the projects would generate returns above the company’s cost of capital, and total capital spending on the offshore projects could reach $35B, Citi said, maintaining a Neutral rating for the stock.
The company also announced a partnership with motor maker WEG to develop Brazil’s most powerful wind turbine, committing 130M reais ($26.8M) over the next 25 months in a 7 MW onshore wind turbine that is already under development by WEG.
Petrobras (PBR) called the deal an “important milestone” that will improve its grasp of wind power technology, as Brazil prepares to develop its first offshore wind farms.
But “Brazil’s coastlines are deeper than Europe’s, making the implementation of offshore wind power more difficult and costly,” Citi analysts said.