The negative effects of the global recession caused by the public health crisis did not substantially impact production and sales performance in 1Q20. The average production of oil, NGL and natural gas was 2,909 kboed, resulting in a commercial production of 2,606 kboed and oil production of 2,320 kbpd. Relative to the same period in 2019 such volumes represent a 14.6% growth in total production, 13.3% in commercial production and 17.7% in oil production, due to the ramp-up of the platforms that started-up in 2018 and 2019 (P-74, P-75, P-76 and P-77 in Búzios field, P-67 and P-69 in Lula and P- 68 in the Berbigão and Sururu fields). It is also worth mentioning that in January 2020 the P-77 platform, in Búzios field, reached a production capacity of 150 kbpd in just 10.4 months.

To deal with the dramatic contraction in global demand for oil - estimated at 25-30 MMbpd in 2Q20 - and fuels we decided at first to reduce our oil production in April to 2.07 MMbpd and the utilization factor of our refineries from 79% to 60% while reinforcing the logistical export capacity of crude oil, diesel and fuel oil.

Such measures have contributed to the generation of cash and the decline in inventories, allowing the maintenance of reasonable leeway in storage capacity, consequently avoiding the adoption of costly measures such as the chartering of ships to store liquids.

With the better than expected evolution of demand for our products, we opted for the gradual return to an average oil production level of 2.26 MMbpd in April alongside an increase in the utilization factor of our refineries.

The environment of uncertainties is reflected in a very fluid markets dynamics, which requires continuously monitoring in order to optimize the management of the productive capacity.

The P-70 platform, a unit that will produce at Atapu field, in the pre-salt of Santos Basin, had its anchoring activities completed and the interconnection activities are being concluded. Thus, we maintain the expectation to start production in the first half of this year. The unit has an oil processing capacity of 150 kbpd and a gas processing capacity of 6 million m3/day.

On March 16, the hull of the FPSO P-71 arrived in Espírito Santo for integration with the other modules at the Jurong Aracruz Shipyard (EJA), and completion is scheduled for 2022. P-71 has an oil processing capacity of 150 kbpd and gas processing capacity of 6 million m³/day.

In Búzios field, in Santos Basin pre-salt, we reached new production records on March 10, with 640 kbpd and 790 kboed, produced on the four platforms (P-74, P-75, P- 76 and P-77) currently installed in the field.

In 1Q20, we carried out the Extended Well Test in the area called Farfan, located approximately 70 km off the coast of Sergipe, which was the first to be carried out in ultra-deep waters in the northeast of Brazil. The data acquired on the behavior of the reservoir in production and the characteristics of its oil will be analyzed and will subsidize the development of the field, which is part of the Sergipe Deep Waters project.

As part of our strategy to restore the exploratory portfolio, we identified in April the presence of oil in an exploratory well in the Uirapuru block, located in the Santos Basin pre-salt. The block was acquired in the 4th Production Sharing Round, in June 2018. Petrobras is the operator of the block and holds a 30% stake, in partnership with ExxonMobil (28%), Equinor (28%) and Petrogal (14%).

We also identified the presence of oil in an exploratory well in the Southwest block of Tartaruga Verde, located in the Campos Basin. The block was acquired in the 5th Production Sharing Round, in September 2018. Petrobras is the operator of the block with a 100% stake.

In the refining segment, the highlight was the average processed feedstock of 1,763 kbpd, representing a refining utilization factor of 79% and an increase of 3% over 4Q19, with no significant impact from COVID-19 on this quarter's performance. Despite the positive result in 1Q20, restrictions on the movement of people and on segments of the economy as of the end of the quarter resulted in an abrupt drop in domestic demand for oil products, except for LPG. Optimizations were made in our plants in order to adapt the production of oil products to the new demand profile, seeking to achieve the maximum profitability of the refining system.

Total average production of oil products in 1Q20 was 1,836 kbpd, exceeding the 4Q19 production by 2.4%. The production of low sulfur bunker and fuel oil continued to stand out, maintaining its appreciation in the international market, according to the IMO 2020 specifications. We started 2020 fully supplying the market, with the required quality, constantly capturing export opportunities, especially in the Asian market. The production of fuel oil, especially bunker streams and low sulfur fuel oil, reached an average of 295 kbpd, a meaningful increase of 18.5% in relation to 4Q19 production.

In February, we broke the record for fuel oil exports, reaching 238 kbpd. Oil exports increased 25% compared to 4Q19, also reaching a new record level of 896 kbpd. As mentioned earlier, as of April, with the reduction in demand in the domestic market, we have been directing our efforts towards the export of our oil and oil products and, for this purpose, we are conducting a series of logistical initiatives that enable the expansion of our export capacity. Although there is a drop in global demand, the competitive advantage of our products, the gradual resumption of China, a strong trading partner, and the constant search for new markets for our products, bring the expectation that we will continue to perform well in our exports.

In the Gas and Power segment, we highlight the reduction of approximately 33.9% in electricity generation compared to 4Q19 as a result of the seasonal improvement in hydrological conditions. Sales volume of natural gas was 10% lower than 4Q19, with a reduction in demand in the thermoelectric and non-thermoelectric segments. In March, the non-thermoelectric volume decreased by 9.6% in relation to February, already reflecting the effects of the COVID-19 pandemic.

KeyFacts Energy: Petrobras Brazil country profile