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Lease liabilities
 12 Months Ended
Dec. 31, 2022
Lease liabilities [abstract]  
Lease liabilities

 

32.Lease liabilities

The Company is the lessee in agreements primarily including oil and gas producing units, drilling rigs and other exploration and production equipment, vessels and support vessels, helicopters, lands and buildings. Changes in the balance of lease liabilities are presented below:

     
  In Brazil Abroad Total
Balance at December 31, 2021 4,604 18,439 23,043
Remeasurement / new contracts 2,730 2,219 4,949
Payment of principal and interest (*) (1,785) (3,638) (5,423)
Interest expenses 365 991 1,356
Foreign exchange gains and losses (169) (1,221) (1,390)
Translation adjustment 287 1,170 1,457
Transfers (12) (135) (147)
Balance at December 31, 2022 6,020 17,825 23,845
Current     5,557
Non-current     18,288
(*) The Repayment of lease liability, disclosed in the Statements of Cash Flows, includes US$ 7 related to assets classified as held for sale.

 

 

  In Brazil Abroad Total
Balance at December 31, 2020 4,340 17,310 21,650
Remeasurement / new contracts 1,655 4,474 6,129
Payment of principal and interest (1,560) (4,267) (5,827)
Interest expenses 243 990 1,233
Foreign exchange gains and losses 151 1,288 1,439
Translation adjustment (272) (1,310) (1,582)
Transfers 47 (46) 1
Balance at December 31, 2021 4,604 18,439 23,043
Current     5,432
Non-current     17,611

 

 

 

A maturity schedule of the lease arrangements (nominal amounts) is set out as follows:

               
Nominal Future Payments up to 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years 5 years onwards Total Recoverable taxes
Without readjustment                
Vessels 2,813 2,000 1,141 491 340 1,695 8,480 255
Others 93 40 19 5 − − 157 14
With readjustment - abroad (*)                
Vessels 238 213 179 158 131 17 936 −
Platforms 1,546 1,539 1,461 1,368 1,358 10,992 18,264 −
With readjustment - Brazil                
Vessels 609 464 288 109 18 10 1,498 120
Properties 159 209 163 156 175 1,365 2,227 93
Others 252 156 129 107 100 419 1,163 73
Nominal amounts on December 31, 2022 5,710 4,621 3,380 2,394 2,122 14,498 32,725 555
Nominal amounts on December 31, 2021 5,567 3,944 3,027 2,309 1,972 14,608 31,427 346
(*) Contracts signed in the U.S. Dollars.

 

 

The following table presents the main information on leases by class of underlying assets, where platforms and vessels represent 92% of the lease liability:

 

         
Present Value of Future Payments Discount rate (%) Average Period Recoverable taxes Closing Balance Opening Balance
Without readjustment                
Vessels       4,0518 5.8 years 255 7,421 6,201
Others       2,5774 2.6 years 14 149 202
With readjustment - abroad (*)                
Platforms       5,7393 13.9 years − 12,340 13,059
Vessels       4,4127 4.2 years − 838 1,431
With readjustment - Brazil                
Vessels       7,8958 2.8 years 120 1,298 850
Properties       8,0496 22.7 years 93 1,010 590
Others       9,8752 7.7 years 73 789 710
Total (**)       5,5127 11.4 years 555 23,845 23,043
(*) Incremental nominal rate on company debt calculated from the yield curve of bonds and credit risk of the Company, as well as terms .
(**)  Total amount, except for the average period column.

 

 

In certain contracts, there are variable payments and amounts less than 1 year recognized as an expense:

     
    31.12.2022 31.12.2021
Variable payments   1,060 898
Variable payments x fixed payments   20% 15%
Up to 1 year maturity   118 110

 

 

At December 31, 2022, the nominal amounts of lease agreements for which the lease term has not commenced, as they relate to assets under construction or not yet available for use, is US$ 79,913 (US$ 79,557 at December 31, 2021).

The sensitivity analysis of financial instruments subject to exchange variation is presented in note 34.3.

Accounting policy for lease liabilities

Lease liabilities, including those whose underlying assets are of low value, are measured at the present value of lease payments, which includes recoverable taxes, non-cancellable periods and options to extend a lease when they are reasonably certain. These payments are discounted at the Company's nominal incremental rate on loans, as the interest rates implicit in lease agreements with third parties usually cannot be readily determined.

Lease remeasurements reflect changes arising from contractual rates or indexes, as well as lease terms due to new expectations of lease extensions or terminations.

Unwinding of discount on the lease liability is classified as finance expense, while payments reduce their carrying amount. According to the Company’s foreign exchange risk management, foreign exchange variations on lease liabilities denominated in U.S. dollars are designated as instruments to protect cash flow hedge relationships from highly probable future exports (see note 34.3).

In the E&P segment, some activities are conducted by joint operations with partner companies where the Company is the operator. In cases where all parties to the joint operation are primarily responsible for the lease payments, the Company recognizes the lease liability in proportion to its share. When using underlying assets arising from a specific contract in which the Company is solely responsible for the lease payments, the lease liabilities remain fully recognized and the partners are charged in proportion to their interests.

Payments associated with short-term leases (term of 12 months or less) are recognized as an expense over the term of the lease.