UPDATE 1-Brazil fuel price rise should be gradual-Petrobras CEO
* Petrobras CEO says fuel policy made 2002-2012 profitable
* Raising fuel prices not healthy for economy now, CEO says
* Venezuela's PDVSA has until November to join refinery
BRASILIA, Sept 11 (Reuters) - Brazil's state-led oil company seeks the convergence of domestic fuel prices with world crude prices rather than a parity between the two, as a sudden price hike would harm the economy, Petrobras Chief Executive Maria das Graças Foster said on Tuesday.
Petrobras' policy of setting gasoline and diesel prices based on long-term crude oil averages rather than short-term swings has provided more profit than loss in the 2002-2010 period and helped the government control inflation, Foster said.
"We don't believe that immediate fuel price parity would be healthy for the economy," Foster told a hearing of the Senate's economic affairs committee. "The impact of a fuel price rise on the economy is great."
Brazil's gasoline and diesel prices are more than 27 percent below world prices, according to the Brazilian Infrastructure Institute, a Rio de Janeiro energy think tank.
This helped lead to Petrobras' first loss in 13 years in the second quarter. The loss reduced cash needed to finance a $237 billion five-year expansion plan, the world's largest corporate spending program.
Under its policy, Petrobras loses money when crude prices rise, but makes those losses back by holding fuel prices steady when world crude benchmarks fall.
Foster also said Venezuela's state-owned PDVSA has until November to decide if it will participate in a refinery under construction near Recife, Brazil.
The Abreu e Lima Refinery is being built with two separate refining chains, one for Brazil's Petrobras the other for PDVSA, the reason the two companies originally agreed to split the refinery's costs.
PDVSA has the right to take a 40 percent stake in the refinery, which is 63 percent complete, Foster said. She added that if PDVSA misses the November deadline, Petrobras may consider changing it.
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