Petrobras needs higher fuel price to invest -CEO

Fri Jun 15, 2012 7:50pm EDT

Related Topics

* Higher oil price needed to fund huge investment plans

* Conflicts energy minister statement ruling out rise

RIO DE JANEIRO, June 15 (Reuters) - Brazil's fuel prices will need to rise in order for state-controlled oil company Petrobras to be able to make the huge investments it announced this week, its CEO, Maria das Gracas Foster, said on Friday.

Brazil's government has forced the company to hold fuel prices steady since 2008, hitting its profits and cash flow.

The company announced a new five-year investment plan on Thursday for the 2012-2016 period with a budget of $236.5 billion, 5 percent more than that of the 2011-2015 plan but it lowered its targets for oil and gas output as costs rise.

Foster said savings on the cost of fuel imports from falling international oil prices had been negated by the weakening of the Brazilian currency, the real, which has lost about 9 percent of its value in the last year.

Though domestic crude output has risen in recent years, lack of refining capacity means Latin America's largest country depends on imports to meet its fuel needs in full.

Foster has commented publicly on several occasions about the need for fuel prices to rise but government officials have made conflicting statements.

The energy minister Edson Lob√£o said on Wednesday that the decline in benchmark crude prices meant there is no chance of a fuel price increase this year. See: (Reporting by Leila Coimbra; Writing by Peter Murphy; Editing by Gary Hill)

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