(Recasts to add government spending debate, background, updates
By Leonardo Goy and Marta Nogueira
BRASILIA/RIO DE JANEIRO, June 24 Brazil plans to
sell billions of dollars worth of offshore oil rights to
state-run oil company Petrobras, a move expected to saddle the
company with new costs even as its debt soars and it struggles
to meet existing production targets.
Shares of Petroleo Brasileiro SA, as Petrobras is
formally known, fell in Sao Paulo trading on Tuesday. Preferred
shares, its most-traded class of stock, slipped 3.9 percent to a
nearly three-week low.
Some investors said the move, to sell 5 billion to 9 billion
barrels of offshore oil rights to the company, was an attempt to
transfer future Petrobras profit to government coffers as an
expected bonanza from offshore oil fails to materialize as
quickly as hoped.
Under the plan, approved by the country's national energy
council on Tuesday, the government will receive 15 billion reais
($6.82 billion) by 2018. Two billion reais are due this year,
said Marco Antonio Almeida, secretary of oil and gas at the
Mines and Energy Ministry.
"This confirms our worst fears," said analysts at Itau BBA
in Sao Paulo, the investment-banking and brokerage arm of Banco
Itau-Unibanco Holding SA.
"There is no way for Petrobras to anticipate the production
of any of those barrels unless it postpones other projects ...
In other words, Petrobras will in fact pay 15 billion (reais) to
the government in five years for barrels to be produced in the
long term," the analysts wrote in their note.
The government will also get 76.5 percent of all oil
produced after development costs are paid, money it will be able
to spend or see transferred to local governments with little
Brazilian President Dilma Rousseff, who promised billions of
dollars in oil revenue from offshore fields when she ran for and
won her first term in 2010, has been slipping in the polls ahead
of an October election.
Despite about $200 billion of Petrobras investment since
then, little of the expected new revenue has materialized and
stagnant production has made Petrobras the world's most-indebted
and least-profitable major oil company.
As Brazil's economy has slowed, party loyalists including
former President Luiz Inacio Lula da Silva have called on
Rousseff to boost spending to win back support.
Petrobras will buy the rights in areas where it bought 5
billion barrels of still unproduced oil from the government in
2010 for $43.5 billion of Petrobras stock. Those areas are
believed to hold more oil than first expected, though there is
no certainty any of the oil will ever be produced from the
high-risk, high-cost, deepwater oil areas.
Petrobras Chief Executive Maria das Gracas Foster said later
on Tuesday that the government's plan to sell new oil rights "is
an excellent opportunity" for the company.
Foster said Petrobras will increase future capital spending
plans by 3 percent above its $221 billion 2014-2017 plan and
build nine new offshore oil platforms to increase output under
the new deal.
($1 = 2.22 Brazilian reais)
(Additional reporting by Rodrigo Viga Gaier; Writing by Jeb
Blount and Reese Ewing; Editing by Jeffrey Benkoe, Marguerita
Choy and Ken Wills)