UPDATE 2-Petrobras to speed asset-sale plan, may add debt -CFO
* Bulk of $9 bln sale plan could be complete by year end
* Debt levels likely to break limit if FX stays the same
* Petrobras fuel reserves to cover refinery maintenance
By Jeb Blount
RIO DE JANEIRO, Aug 12 (Reuters) - Brazil's state-run oil company Petroleo Brasileiro SA said on Monday that it will complete the bulk of a $9 billion, five-year, asset-sale plan this year as it tries to limit rising borrowing as a way to finance the world's largest corporate spending program.
With the sale of half of its African operations, total asset sales under the plan rose to $1.8 billion at the end of the second quarter, Chief Financial Officer Almir Barbassa said on a conference call to discuss second-quarter earnings.
Despite the asset-sale cash, Petrobras, as the Rio de Janeiro-based company is known, might still have to increase its debt this year, Barbassa said. If the exchange rate is little changed by year end, "leverage", or net debt divided by net capital, could rise above a 35 percent target the company imposed on borrowing in a revised five-year investment plan announced in March.
With the real trading at 2.28 to the dollar, debt payments in local currency are nearly 20 percent more expensive than they would be at 1.85, the long-term exchange rate Petrobras used in to revise its plan.
Debt has also grown in the face of falling output, and the burden of fuel-subsidies. Keeping its "investment-grade" rating will be crucial to controlling the cost of Petrobras' 249 billion reais ($110 billion) of short- and long-term debt, Barbassa said.
"We have been working closely with ratings agencies to explain our situation," Barbassa told analysts. "I believe they are comfortable with our situation."
That comfort, he said, derives from the company's growth prospects and cost-cutting efforts.
The sale of oil fields, exploration rights, refineries and other assets are being made to help finance a $237 billion, five-year investment plan. Selling assets, though, has been harder than expected. In March, Petrobras lowered its forecast for the value of asset sales by nearly 40 percent to $9 billion from $14.8 billion.
The expansion plan aims to develop giant new offshore oil fields south of Rio de Janeiro to more than double oil and natural gas output to 5.2 million barrels a day and build up to five refineries to increase refining capacity by a third to 3 million barrels a day by 2020.
If it succeeds, Brazil could become one of the top-five oil producers in the world in less than a decade.
Delays though have been frequent, meaning Petrobras will have to wait longer to earn the cash lenders are counting on to pay existing debts.
While Petrobras hopes to start four, new floating offshore production systems by the end of the year with the capacity to produce up to 400,000 barrels a day of crude, all have fallen behind schedule since March.
The P-63 FPSO production ship is now set to start output in late October, more than three months behind the outlook in March, Jose Formigli, head of exploration and production said.
The P-55 semi-submersible platform to boost output from the giant Roncador field is also behind schedule, he added.
These units, though, will do little but help Petrobras make up for declining output from old fields and replace output from fields under maintenance. Petrobras expects to meet its Brazilian production target for 2013 of 2 million barrels a day, plus or minus 2 percent, an amount little changed from 2010, Formigli said.
Investors, who have seen Petrobras' performance stagnate along with production, may get some relief from accounting changes adopted for the first time in the second quarter.
On Friday, Petrobras reported second-quarter profit of 6.20 billion reais ($2.71 billion), reversing a year-earlier loss after the change, known as "hedge accounting" allowed it to avoid 8 billion reais ($3.5 billion) in non-cash, exchange-rate charges.
Without the accounting change, Petrobras would have reported its second loss in a year.
These losses will now be spread over an average of seven years by setting aside some of the company's current export revenue in the period, Barbassa said.
While Petrobras executives have no plan to ask the board for supplementary dividends for investors this year, the accounting change, if exchange rates remain the same, could boost dividend payments by about 600 million reais from where they otherwise would have been without it, Barbassa said.
Petrobras also plans to perform maintenance on its 151,000-barrel-a-day Gabriel Passos Refinery (REGAP) in Betim in the third quarter and on its 252,000-barrel-a-day Henrique Lage Refinery (REVAP) in São José dos Campos in the third and fourth quarters of 2013.
The company, which has been running its refineries near full capacity, said on Monday that it has built up fuel reserves to ease the impact of planned maintenance later this year.
After the telephone conference, Petrobras gave up early gains to fall in afternoon trading Monday in Sao Paulo.
The company's preferred shares, Petrobras' most-traded class of stock, fell 0.9 percent to 16.93 reais. It's common shares fell 0.4 percent to 16.02 reais.
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