Petrobras CEO says fuel imports rising; awaits price increase-Globo

Sun Dec 23, 2012 1:12pm EST

* CEO expects gasoline to rise about 6 pct by 2016

* Petrobras plan sees 4 pct diesel increase by 2016

* December gasoline imports rose 56 pct vs November

RIO DE JANEIRO, Dec 23 (Reuters) - Gasoline imports by Brazil's state-led oil company Petrobras surged 56 percent in December and will continue rising in 2013, Chief Executive Maria das Gra├žas Foster said in an interview published by the Globo newspaper on Sunday.

While Brazilian Finance Minister and Petrobras Board Chairman Guido Mantega has promised higher fuel prices in 2013, no date for a rise has been set, and Petrobras may not receive its full, planned increases in gasoline and diesel until 2016, Foster told Globo.

Despite getting approval for its first wholesale fuel-price increase in six years in June, Petrobras still sells fuel at below world-market prices. As a result, every barrel of imports adds to the more than $8 billion of losses already accumulated this year by the company's refining and supply unit.

"Our (2012-2016) business plan was based on getting a 15 percent increase for gasoline and diesel in this period," she told the paper.

Because of a 3.94 percent increase in diesel and 7.83 percent rise in gasoline in June and another 6 percent diesel increase in July, Petrobras "now has a difference of about 4 percent in diesel and 6 percent in gasoline," compared with the 2012-2016 plan, she added.

"I'm not saying that this is the increase," Foster told Globo. "This is the value that could be given in one step or in stages (until 2016). There is no date or hour set for this to be given."

While she said that losses because of imports and below-market fuel prices are not causing a cash-flow problem at the Rio de Janeiro-based company, the losses have drained cash away from a $237 billion investment plan, the world's largest corporate investment program.

Despite giant offshore discoveries near Rio de Janeiro and Sao Paulo, output fell in 2012 and new fields are behind schedule.

"The sooner we get a price hike the better," she said. "It's important that Petrobras has a fuel-price adjustment next year, like the minister said," Foster told Globo. "Now, I just don't know when."

In the month through Dec. 21, Petrobras' gasoline imports averaged 178,000 barrels per day (bpd) and are 56 percent higher than in November, thanks to the Southern Hemisphere summer, Brazilian vacations and other seasonal factors, Foster told Globo.

This will bring the annual average fuel imports to more than 80,000 barrels a day, a level that will rise more in 2013, but at a slower rate than in 2012, she said.

The failure to adjust fuel prices is the main reason non-government investors, who own a majority of total company shares but only a minority of voting stock, are upset with the company's management, Foster told the paper.

This dissatisfaction is the main reason Petrobras, one of the world's 10 largest corporations by market value in 2008, is now worth less than Ambev, the Brazilian-traded unit of global brewing company Anheuser-Busch InBev. There is little those investors can do about their predicament, she said.

"The market wants to see oil produced and clarity on how prices will be adjusted," Foster told Globo. "The government is the controlling shareholder. It's the owner of Petrobras. Period. Government interference, as it is called, I call management."

Petrobras, though, may face more government interference in pricing. The government Dec. 12 that it is considering plans to cut natural gas prices in Brazil.

Foster told Globo that reducing gas prices would be hard because the company buys liquefied natural gas on the world spot market and that new gas supplies being developed in Brazil are dominated by expensive offshore production associated with oil output.

The company though is looking at developing new "conventional and non-conventional" natural gas in onshore exploration areas and plans to bid for onshore areas in a coming round of oil exploration rights auctions.

"The board of directors this week approved a restructuring of a large onshore gas project in Brazil," she told Globo. "We are looking for gas on land and the great challenge is to know what is the lowest cost of production."

Other points in the Foster interview with Globo included:

* The company, which expects to spend 85 billion reais ($41 billion) on investment this year, will spend about the same amount in 2013.

*Petrobras is preparing a 2013-2017 investment plan, and is drawing longer-term plans through 2030 that will be released next year.

*Petrobras plans to borrow about $18 billion in 2013.

*Petrobras wants to continue exploring for and producing oil and gas in Argentina. Its other assets there are part of an asset-sale program.

Petrobras press officials did not return calls requesting comment on the interview.

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