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Petrobras requires capitalisation to make investment in Brazil

Date added: 25th March, 2010 at 09:55
(view all articles from March, 2010)

Petrobras has said it does not have the available funds with which to make a further investment in Brazil this year.

The company, which is the largest integrated energy firm in Brazil, is seeking a capital injection from the government in order for it to expand during 2010.

Jose Sergio Gabrielli, chief executive at Petrobras, stated that the company will be unable to make an investment in Brazil this year without fresh cash input from the state, Reuters reports.

"We have very little flexibility for 2010 because most of the investments are already ongoing and we have contracts for them, which means that we need the capitalisation in 2010," he commented.

The Brazilian government is currently trying to pass a bill that would mean Petrobras will receive five billion barrels of state-owned untapped oil reserves, in exchange for a greater share of the company.

"Right now we are considering only one possibility - the capitalisation with the transfer of rights," added Mr Gabrielli.

"If it's not possible then we have to take into consideration what the alternatives are."

However, reports earlier in the month suggested Petrobras could be about to make an investment in Brazil to double production at its Candeias unit, which produces biodiesel.

About $36.5 million (£24 million) could be invested into the site, with production planned to increase from its current level of 108.6 million litres to 217.2 million litres annually.

The unit, which is located in Bahia in the North East of the Latin American country, is already responsible for producing more than a third of the company's renewable fuel output.

This comes as Petrobras has been recommended as a good company for people looking to make an investment in Brazil.

According to Zacks Equity Research, demand for energy is set to continue to increase this year, as the country's economy is outperforming those of more developed nations.

Petrobras' recent discoveries should also enable it to increase its resource base, while its expertise in deep-water operations will stand it in good stead.

Zacks stated that Petroleo Brasileiro SA could also be a good option for people who are considering making an investment in Brazil.

Meanwhile, Petrobras has been blamed for the recent gasoline crisis in Argentina by the country's government.

Planning minister Julio De Vido stated that YPF, the Argentine unit of Spanish oil major Repsol, had been forced to raise its prices as rival companies Petrobras and Royal Dutch Shell had caused a shortage.

"Shell and Petrobras are disrupting the refining of oil to create a shortage in the domestic market and force YPF to increase its prices," he commented. ADNFCR-1477-ID-19688178-ADNFCR