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Finance debt
 12 Months Ended
Dec. 31, 2022
Finance Debt  
Finance debt

 

31.Finance debt
31.1.Balance by type of finance debt
   
In Brazil 12.31.2022 12.31.2021
Banking market 1,285 1,237
Capital market 2,896 2,504
Development banks (*) 723 769
Others 4 7
Total 4,908 4,517
Abroad    
Banking market 8,387 8,525
Capital market 14,061 19,527
Export credit agency 2,443 2,951
Others 155 180
Total 25,046 31,183
Total finance debt 29,954 35,700
Current 3,576 3,641
Non-current 26,378 32,059
(*) It includes BNDES, FINAME and FINEP

 

 

 

Current finance debt is composed of:

 

   
  12.31.2022 12.31.2021
Short-term debt − 108
Current portion of long-term debt 3,111 3,063
Accrued interest on short and long-term debt 465 470
Total 3,576 3,641

 

 

The capital market balance is mainly composed of US$ 13,442 in global notes issued abroad by the wholly owned subsidiary PGF, as well as US$ 1,874 in debentures and US$ 880 in commercial notes issued by Petrobras in reais in Brazil.

The balance in global notes has maturities between 2024 to 2115 and does not require collateral. Such financing was carried out in dollars, euros and pounds, 87%, 2% and 11%, of the total global notes, respectively.

The debentures and the commercial notes, with maturities between 2024 and 2037, do not require collateral and are not convertible into shares or equity interests.

31.2.Changes in finance debt
     
  In Brazil Abroad Total
Balance at December 31, 2021 4,517 31,183 35,700
Proceeds from finance debt 853 2,027 2,880
Repayment of principal (*) (1,013) (8,183) (9,196)
Repayment of interest (*) (292) (1,554) (1,846)
Accrued interest (**) 396 1,867 2,263
Foreign exchange/ inflation indexation charges 120 (580) (460)
Translation adjustment 326 287 613
Balance at December 31, 2022 4,907 25,047 29,954

 

 

  In Brazil Abroad Total
Balance at December 31, 2020 8,854 45,035 53,889
Proceeds from finance debt - 1,754 1,754
Repayment of principal (*) (4,213) (14,894) (19,107)
Repayment of interest (*) (245) (1,613) (1,858)
Accrued interest (**) 241 1,970 2,211
Foreign exchange/ inflation indexation charges 173 82 255
Translation adjustment (228) (200) (428)
Balance at December 31, 2021 4,582 32,134 36,716
(*) It includes pre-payments.
(**) It includes premium and discount over notional amounts, as well as gains and losses by modifications in contractual cash flows.

 

 

In 2022, the Company repaid several finance debts, in the amount of US$ 11,184 notably US$ 5,444 to repurchase global bonds previously issued by the Company in the international capital market.

In the same period, the Company raised funds in the amount of US$ 2,880, mainly reflecting: (i) US$ 1,244 through a Sustainability-Linked Loan, in the international banking market, maturing in 2027; (ii) US$ 572 through the issuance of commercial notes in the Brazilian capital market due in 2030 and 2032; and (iii) US$ 280 through the issuance of private placement commercial notes that backed the issuance of certificates of real estate receivables, maturing in 2030, 2032 and 2037. The certificates of real estate receivables were issued by a securitization that fully subscribed the Commercial Notes issued by Petrobras.

The loan linked to sustainability commitments was signed with Bank of China, MUFG and The Bank of Nova Scotia, with a value of US$ 1,244 and maturity in July 2027. The contract includes incentive mechanisms for achieving sustainability commitments, based on the corporate performance indicators of E&P's greenhouse gas (GHG) intensity, refining GHG intensity and E&P methane intensity.

31.3.Reconciliation with cash flows from financing activities
           
      2022     2021
  Proceeds from finance debt Repayment of principal Repayment of interest Proceeds from finance debt Repayment of principal Repayment of interest
Changes in finance debt 2,880 (9,196) (1,846) 1,754 (19,107) (1,858)
Repurchase of debt securities − (121) − − − −
Deposits linked to finance debt (*) − (17) (4) − − −
Net cash used in financing activities 2,880 (9,334) (1,850) 1,754 (19,107) (1,858)
(*) Deposits linked to finance debt with China Development Bank, with semiannual settlements in June and December.

 

 

31.4.Summarized information on current and non-current finance debt
               
Maturity in Up to 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years 5 years onwards Total (*) Fair Value
                 
Financing in U.S.Dollars (US$): 2,879 3,240 2,569 1,528 2,465 10,006 22,687 22,721
Floating rate debt (**) 2,588 2,681 1,934 1,143 1,739 652 10,737  
Fixed rate debt 291 559 635 385 726 9,354 11,950  
Average interest rate p.a. 6.8% 6.5% 6.1% 6.3% 5.9% 6.6% 6.6%  
Financing in Brazilian Reais (R$): 622 690 221 440 427 2,507 4,907 4,907
Floating rate debt (***) 324 280 138 138 333 1,060 2,273  
Fixed rate debt 298 410 83 302 94 1,447 2,634  
Average interest rate p.a. 6.7% 6.9% 6.5% 6.2% 6.4% 6.6% 6.6%  
Financing in Euro (€): 37 13 289 − − 583 922 897
Fixed rate debt 37 13 289 − − 583 922  
Average interest rate p.a. 4.7% 4.7% 4.7% - - 4.7% 4.7%  
Financing in Pound Sterling (£): 38 − − 555 − 845 1,438 1,328
Fixed rate debt 38 − − 555 − 845 1,438  
Average interest rate p.a. 6.2% 0.0% 0.0% 6.2% 0.0% 6.5% 6.3%  
Total as of December 31, 2022 3,576 3,943 3,079 2,523 2,892 13,941 29,954 29,853
Average interest rate 6.7% 6.5% 6.1% 6.2% 6.0% 6.6% 6.5%  
Total as of December 31, 2021 3,641 2,973 3,988 3,449 2,832 18,817 35,700 37,891
Average interest rate 5.2% 5.3% 5.5% 5.6% 5.9% 6.5% 6.2%  
(*)The average maturity of outstanding debt as of December 31, 2022 is 12.07 years (13.39 years as of December 31, 2021).
(**) Operations with variable index + fixed spread.
(***) Operations with variable index + fixed spread, if applicable.

 

 

The fair value of the Company's finance debt is mainly determined and categorized into a fair value hierarchy as follows:

Level 1- quoted prices in active markets for identical liabilities, when applicable, amounting to US$ 13,061 of December 31, 2022 (US$ 20,770 of December 31, 2021); and

Level 2 – discounted cash flows based on discount rate determined by interpolating spot rates considering financing debts indexes proxies, taking into account their currencies and also Petrobras’ credit risk, amounting to US$ 16,792 as of December 31, 2022 (US$ 17,121 as of December 31, 2021).

Regarding the Interest Rate Benchmark Reform (IBOR Reform), in order to prepare for the transition to alternative reference rates, the Company continues to monitor the pronouncements of regulatory authorities, aimed at adapting its financial instruments to the new benchmark, and the Company expects that the replacement of the LIBOR reference in the current financing agreements will be carried out under market conditions and, therefore, expects that there will be no material impacts when this process is completed.

The Company has debts indexed to Libor (London Interbank Offered Rate), corresponding to 30.8% of total finance debt.

The sensitivity analysis for financial instruments subject to foreign exchange variation is set out in note 34.3.

A maturity schedule of the Company’s finance debt (undiscounted), including face value and interest payments is set out as follows:

 

               
Maturity 2023 2024 2025 2026 2027 2028 and thereafter 12.31.2022 12.31.2021
Principal 3,106 4,061 3,173 2,665 2,657 16,041 31,703 36,557
Interest 1,928 1,748 1,441 1,282 1,068 17,348 24,815 30,557
Total 5,034 5,809 4,614 3,947 3,725 33,389 56,518 67,114

 

 

A maturity schedule of the lease arrangements (nominal amounts) is set out in note 32.

31.5.Lines of credit
           
            12.31.2022
Company

Financial

institution

 Date Maturity

Available

(Lines of Credit)

 Used Balance
Abroad            
PGT BV Syndicate of banks 12/16/2021 11/16/2026 5,000 − 5,000
PGT BV (*) Syndicate of banks 3/27/2019 2/27/2024 3,250 − 3,250
Total       8,250 − 8,250
             
In Brazil            
Petrobras Banco do Brasil 3/23/2018 9/26/2026 383 − 383
Petrobras Banco do Brasil 10/4/2018 9/5/2025 383 − 383
Transpetro Caixa Econômica Federal 11/23/2010 Not defined 63 − 63
Total       829 − 829
(*) In April 2021, the subsidiary PGT BV extended part of the Revolving Credit Facility. As such, US$ 2,050 will be available for withdrawal from February 28, 2024 until February 27, 2026.

 

 

31.6.Covenants and Collateral
31.6.1.Covenants

The Company has covenants that were not in default at December 31, 2022 in its loan agreements and notes issued in the capital markets requiring, among other obligations i) the presentation of interim financial statements within 90 days of the end of each quarter (not reviewed by Independent Registered Public Accounting Firm) and audited financial statements within 120 days of the end of each fiscal year, with a grace period ranging from 30 to 60 days, depending on the agreement; ii) Negative Pledge / Permitted Liens clause; and iii) covenants with respect to debt level in some of its loan agreements with the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social - BNDES).

Additionally, there are other non-financial obligations that the Company has to comply with: i) clauses of compliance with the laws, rules and regulations applicable to the conduct of its business including (but not limited to) environmental laws; (ii) clauses in financing agreements that require both the borrower and the guarantor to conduct their business in compliance with anti-corruption laws and anti-money laundering laws and to institute and maintain policies necessary for such compliance; and (iii) clauses in financing agreements that restrict relations with entities or even countries sanctioned primarily by the United States (including, but not limited to, the Office of Foreign Assets Control - OFAC, Department of State and Department of Commerce), the European Union and United Nations.

31.6.2.Collateral

Most of the Company’s debt is unsecured, but certain specific funding instruments to promote economic development are collateralized. Such contracts represent 16% of the total financing, notably a Financing agreement with China Development Bank (CDB).

The loans obtained by structured entities are collateralized based on the projects’ assets, as well as liens on receivables of the structured entities. Bonds issued by the Company in the capital market are unsecured.

The global notes issued by the Company in the capital market through its wholly-owned subsidiary Petrobras Global Finance B.V. – PGF are unsecured. However, Petrobras fully, unconditionally and irrevocably guarantees these notes.

Accounting policy for loans and finance debt

Loans and finance debt are initially recognized at fair value less transaction costs that are directly attributable to its issue and subsequently measured at amortized cost using the effective interest method.

When the contractual cash flows of a financial liability measured at amortized cost are renegotiated or modified and this change is not substantial, its gross carrying amount will reflect the discounted present value of its cash flows under new terms using the original effective interest rate. The difference between the book value immediately prior to such modification and the new gross carrying amount is recognized as gain or loss in the statement of income. When such modification is substantial, the original liability is extinguished and a new liability is recognized, impacting the statement of income for the period.