Average revenue estimate of R$163.7bn represents 34.6% increase over 2021


Analysts expect that state-owned company will maintain good cash generation in the quarter — Foto: Geraldo Falcão/Agência Petrobras

Analysts expect that state-owned company will maintain good cash generation in the quarter — Foto: Geraldo Falcão/Agência Petrobras

Oil prices and the exchange rate are expected to have a prominent role in the third-quarter earnings report Petrobras is set to release after the market closes on Thursday. Analysts also cite the greater use of refineries and falling imports of liquefied natural gas as important factors. The average of forecasts of three banks compiled by Valor suggests a net income of R$163.7 billion, which would mean a 34.6% year-over-year growth.

The analysts’ expectation is that the state-owned company will maintain good cash generation in the quarter and announce new dividend payments on Thursday. The projections of BTG Pactual, Goldman Sachs, and Itaú BBA for revenue vary between R$153.3 billion and R$177.89 billion.

On average, the three banks estimate an EBITDA of R$95.2 billion, which would represent a 15% increase over the third quarter of 2021.

“Despite reductions in oil prices and maintenance shutdowns at major refineries in the quarter, we expect Petrobras to announce solid results, with the high refinery utilization rate and increased sales compared to the previous quarter,” Itaú BBA analysts wrote in a report.

Petrobras is expected to report profits in the quarter. In the case of Itaú BBA, the state-owned company is seen as posting gains of R$41.84 billion. Goldman Sachs estimates that the company will earn R$45.56 billion, while BTG Pactual foresees gains of R$53.57 billion.

In dollars, UBS forecasts the company will post a $8 billion profit, while XP is a little more optimistic and estimates $8.2 billion. It is important to emphasize, however, that the profit may still suffer non-recurring effects, which are harder for banks to estimate.

As a comparison, in the third quarter of last year, the company posted a net profit of R$31.14 billion, while in the second quarter of 2022, the net profit was R$54.3 billion.

From July to September this year, the price of oil remained high in the international market, but lower than in the previous quarter, when there was greater impact from the war in Ukraine. According to Itaú BBA calculations, the Brent, the main international oil reference, had an average price of $98 per barrel in the third quarter.

The banks estimate that the state-owned company will pay more than $6 billion in dividends referring to the quarter’s results. Goldman Sachs points out that Petrobras can distribute up to $12 billion in dividends by the end of the year, without reducing the cash position to less than $9 billion.

According to the data released on Monday, Petrobras had an average production of 2.64 million barrels of oil equivalent per day (boe/day) in the third quarter, down 6.6% year-over-year. In relation to the immediately previous quarter, the drop was 0.3%.

One factor expected to contribute for the state-owned company to see better financial results in the annual comparison is the increase in rainfall. In 2021, Brazil faced a historic drought that affected hydroelectric generation and led the company to increase LNG imports to supply thermoelectric plants. This year, the scenario was reversed and LNG imports fell. Thus, according to XP, the gas and energy sector is expected to report good margins in the third quarter of 2022.

The release of Petrobras’s results on Thursday will be followed on Friday by two conference calls, one in English and another in Portuguese, and a press conference, in which the company’s executives will comment on the numbers.

XP stated, in a report, that investors will be alert to comments regarding signs of cost inflation in operations and updates on the sale of company assets, as well as possible talk about upcoming moves on dividends.

*By Gabriela Ruddy — Rio de Janeiro

Source: Valor International

SBM, Camargo Corrêa and Nova Participações were reintegrated to oil company’s base


Companies that provide services to Petrobras and that were excluded, as of 2014, from the register of suppliers for involvement in cases of corruption investigated by the anti-corruption task force Car Wash are returning to have commercial relations with the oil company, although not all of them are able to close contracts for the provision of goods and services. SBM, based in Monaco, Camargo Corrêa and Nova Participações, former Engevix, are among the companies reintegrated to the Petrobras supplier base, but they are in different situations.

SBM, for example, has a contract in place with Petrobras to deliver by 2023 a platform for the Mero field, in the Santos Basin. The contract, agreed in 2019, was SBM’s first with Petrobras after the Car-Wash allegations in which the company was accused of wrongdoings by the Federal Prosecution Service and had to sign a leniency agreement with the authorities. Leniency is a kind of plea bargaining for business entities that admit wrongdoing in government contracts.

From 2014 to 2021, Car Wash investigated irregularities committed by Petrobras’ suppliers and former employees. According to the latest available data, Petrobras had been reimbursed R$6.2 billion for the damage found in the investigations. Both the state-owned company and suppliers have undergone improvements in corporate governance policies.

SBM’s CEO, Bruno Chabas, says the episodes of corruption revealed have helped the company to reinvent itself: “It was part of our history and we have learned from it. We have become a different company, we are more transparent, and we are aware of our impact on society,” he said.

Camargo Corrêa was also reinstated, in 2020, to the list of Petrobras suppliers, but has not yet signed any contracts. Nova Participações, formerly Engevix, returned to the Petrobras supplier base, but is still considered high risk, a classification that prevents it from signing contracts with the oil company.

Part of the companies authorized for contracting by Petrobras did not close new deals as a result of the reduction of investments by the state-owned company in large infrastructure projects, say sources in the construction area. The Petrobras contracts for works involves long chains of suppliers. In 2021, the company closed R$239.85 billion in supply contracts for goods and services in Brazil and abroad with 9,751 companies, including platforms and other goods. In 2020, the state-owned company closed contracts worth R$253.3 billion with 10,335 suppliers.

Despite resuming relations with companies involved in Car-Wash, there are still 76 companies on Petrobras’ list that are suspended from bidding or on precautionary blockade.

This classification appeared in 2014 to deal with those investigated in the Car Wash task-force. Not all cases, however, are related to the corruption probe. Of the total of blockades, 62 correspond to decisions made as of 2021, the year in which the task force was closed.

Salvador Dahan — Foto: Divulgação/Vivian Fernandez

Salvador Dahan — Foto: Divulgação/Vivian Fernandez

Salvador Dahan, Petrobras’ Chief Governance & Compliance Officer, told Valor that the reasons for the current suspensions are diverse and range from problems in the corporate structure to failures in the integrity programs identified by the state-owned company: “Some [companies] may not have problems [of corruption], but do not have the foundations of a compliance program,” he said.

Among the companies still blocked by Petrobras that were involved in Car-Wash are Odebrecht Ambiental and Base Engenharia, formerly Schahin. Odebrecht Ambiental had its operational assets sold to BRK in 2017 and is now a non-operational company. Novonor, formerly Odebrecht, would not have sought to remove Odebrecht Ambiental from Petrobras’ blockade list because today the company is no longer part of the group’s operational assets. Base Engenharia was declared bankrupt in 2018.

Since 2015 Petrobras assigns an integrity risk level (GRI) to all companies with which it has a business relationship. The supplier evaluation process begins with the completion of a due diligence questionnaire, known as due diligence of integrity (IDD), with questions about the suitability and internal control programs of the companies. After this internal evaluation process, Petrobras defines the risk level of each company, which can be high, medium, or low. Low- and medium-grade companies are eligible to participate in bids to sign contracts.

“We do not want to associate our name and brand with companies that are committing violations, illegalities or that do not respect the same principles that we have. The goal is to protect Petrobras and its entire value chain,” said the state-owned company’s CEO. More than 80% of the companies in Petrobras’ supplier base, says Mr. Dahan, are considered low risk, while only 2% are still high risk. He says that 40% of the companies that at some point were identified as high risk by Petrobras were able to reverse the picture and become low or medium GRI, which allow them to participate in bids.

Nova Participações is one of the companies registered with Petrobras seeking to improve its GRI. According to the Federal Prosecution Service (MPF) in the Car-Wash task-force, the company was part of a scheme to pay bribes and form a cartel. The company closed a leniency agreement in 2019, in which it committed to pay R$516 million until 2047, for the losses generated, and also needed to undergo reorganization.

Adjair dos Santos, Nova Participações’ chief compliance officer, says the company hired an external consulting firm to map integrity risks in internal processes in 2017. Since then, a compliance area was set up, responsible for measuring actions and mitigating risks. In 2019, Nova Participações’ governance management was developed into an area that monitors the processes that occur within the company, which includes hiring, payments, and contract terminations. “All of this generated a transformation of people, of processes, of risk visualization,” he said.

Despite its efforts, Nova Participações has yet to close contracts with Petrobras. Today, the company provides services to private companies in the electrical sector, in the engineering of hydroelectric and solar generation plants and transmission lines. The company recently asked Petrobras for a reassessment of its risk rating. The expectation is that the GRI will fall to low or medium, according to Mr. Santos.

The risks identified in the anti-corruption task force led Petrobras to institute, in 2014, a public list of suppliers with whom it could not close new deals, in addition to strengthening surveillance mechanisms. In 2015, the state-owned company created a governance board. To be able to sign contracts with Petrobras again, suppliers had to implement improvements in internal controls to prevent and combat fraud and corruption.

The companies involved in the investigations were taken off the list of suppliers blocked by Petrobras as they signed leniency agreements with the MPF. This type of agreement, considered a kind of “rehabilitation” for business entities, allows companies involved in illicit practices to collaborate with investigations and take actions so that irregularities do not recur, in exchange for the easing of sanctions. Leniency agreements also involve payment of fines.

After the leniency agreements, Petrobras allowed the companies to take part in the bids, but the reinstatement was different for each supplier. Today, among the criteria for a company to be among those qualified to participate in Petrobras’ bids is the guarantee that the senior management has no executives involved in scandals, in addition to the existence of an independent board of directors. The development of more robust governance areas is one of the factors that allowed the suppliers to return to Petrobras’ suppliers base.

Emilia Malacarne, a lawyer from law firm Souto Correa’s compliance area, states that the purpose of a compliance program is the prevention and detection of frauds, illicit acts and irregularities, as well as the remediation of a problem, when detected. She points out that it is important for the company to apply these policies in day-to-day activities. “Compliance is a culture change, done through mechanisms. But it is necessary that the company shows, on a day-to-day basis, that these values have a practical effect.”

*By Gabriela Ruddy — Rio de Janeiro

Source: Valor International

Just three months ahead of presidential elections, potential investors do not believe that sale process will be concluded this year


Petrobras resumed sales of three refineries in June — Foto: Divulgação Petrobras/Diego Pisante

Petrobras resumed sales of three refineries in June — Foto: Divulgação Petrobras/Diego Pisante

The sales of three Petrobras refineries may not be competitive, sources say. The oil company starts receiving non-binding proposals as of this Thursday for three units: Abreu e Lima (Rnest), in Pernambuco, Presidente Getúlio Vargas (Repar), in Paraná, and Alberto Pasqualini (Refap), in Rio Grande do Sul. The move includes logistics assets integrated into these facilities.

Just three months ahead of the presidential elections, potential investors do not believe that the sale will be concluded this year. Petrobras is being advised by Citi. Sources within the oil company said the deal is unlikely to be concluded by October.

As former president Luiz Inácio Lula da Silva leads the polls, the concern is that the sale of assets may be interrupted if he wins the presidential race. According to Mr. Lula da Silva’s government plan, he is against the privatization of Petrobras.

Even in a scenario in which incumbent Jair Bolsonaro (Liberal Party) is reelected, potential buyers don’t feel safe either, said on condition of anonymity one businessman who is still evaluating whether to bid for one of the units. “All these moves of the president concerning the change of command at Petrobras and trying to intervene in the price policy make investors feel insecure,” he said.

According to sources, Ultra, owner of the Ipiranga gas station chain, does not intend to bid for Petrobras. The group had once advanced in the process of buying the Refap unit, in Rio Grande do Sul. However, in October last year, the two parties announced that the negotiations had fell apart. The purchase of Refap would be strategic for Ultra in the oil and gas industry. Sources say that Petrobras tried to renegotiate a higher price for the refinery, higher than the group’s previous bid.

The Cosan group, a producer of bioethanol, sugar, and energy, is still evaluating whether to make an offer. Last year, it made a bid for Repar, but it fell short of the oil company’s intentions to sell. Sovereign wealth fund Mubadala, the owner of the Mataripe unit (formerly Landulpho Alves), is not interested in making an offer for one of the units in the South region either, sources say.

The sale of the refineries is part of the agreement signed in 2019 between the oil company and the antitrust regulator CADE for the sale of eight units, so to attract other companies to the industry. The assets for sale account for about half of the state-owned company’s processing capacity.

So far, only the sale of the Bahia refinery has been concluded. Petrobras has already signed contracts for units SIX, in Paraná, and Reman, in Amazonas, but the deals have not been closed yet.

The unsuccessful sale process of Rnest was terminated in August 2021, after the interested parties gave up submitting binding proposals. As a result, Petrobras opted to include in the business plan the conclusion of the project’s second refining train, with planned investments of $1 billion. According to the company, the intention is to broaden the interest of potential buyers.

According to a specialist in the oil and gas industry, Petrobras took too long to take the sale process ahead. For him, CADE should have put more pressure. “Now it has lost the timing. The price [intervention] still weighs.”

This source understands that this sale process does not favor competition, since the refineries in São Paulo and Rio de Janeiro were left out of the Petrobras divestment process. “If the idea is to foster competition, CADE should include refineries from those states. But Petrobras does not want to give up its best assets.”

In a note, Petrobras stressed its commitment to the broad transparency of its divestment projects and portfolio management and said that the subsequent stages of the project will be disclosed in due course. Cosan and Ultra declined to comment. Mubadala did not immediately reply to a request for comment.

*By Mônica Scaramuzzo, Gabriela Ruddy — São Paulo, Rio de Janeiro

Source: Valor International

Meanwhile, changes in management team of oil behemoth are also in standstill


Fuel prices prompted change in the command of Petrobras — Foto: Leo Pinheiro/Valor

Fuel prices prompted change in the command of Petrobras — Foto: Leo Pinheiro/Valor

The double-digit gap between diesel prices in Brazil and abroad means that Petrobras could immediately raise costs to refineries, sources told Valor. The company, however, continues to analyze the market situation before deciding.

Consultants’ calculations indicate that the price of diesel that Petrobras charges from distributors is between 15% and 17.5% below international parity. In the case of gasoline, there are estimates that the price the state-owned charges from distributors in Brazil is 45% below the price negotiated in the Gulf of Mexico, one of the world’s main refining centers.

Meanwhile, the management changes intended by the government in the state-owned company, as part of President Jair Bolsonaro’s strategy to try and control fuel prices, continue to face difficulties.

On Wednesday, there was a meeting of the board of Petrobras. The company’s strategic planning was on the agenda, but the discussion turned to the state-owned company’s Eligibility Committee (Celeg), linked to the Personnel Committee (COPE). Celeg/COPE verifies if candidates for the board meet the necessary requirements and have no restrictions to run for the position, according to the internal rules of the company and the State-Owned Companies Law.

In a statement released on Thursday, Petrobras confirmed that the collegiate debated the day before a request made by the federal government, the company’s controlling shareholder, to replace the current CEO, José Mauro Coelho, by Caio Paes de Andrade, who is associated with Economy Minister Paulo Guedes. But there was no decision concerning this issue. A person familiar with the company said that “the analysis [of Mr. Paes de Andrade by Celeg] has not been made yet because the information is not ready.”

Mr. Paes de Andrade was nominated on May 23, through a letter from the Ministry of Mines and Energy (MME), which requested a shareholders’ meeting to elect him as a board member — the first step for him to become the company’s CEO to replace José Mauro Coelho. On May 25, the Petrobras collegiate met and concluded that it needed to wait until the federal government sent the list of eight candidates (including Mr. Paes de Andrade) to the Petrobras board, which has not yet happened.

Mr. Coelho, the current CEO of Petrobras, was elected in the shareholders’ meeting in April by an unbundled vote, and once he is removed all other members of the collegiate elected by the same system must go through a new election. Eight of the 11 members of the Petrobras board were elected by this method, which allows votes to be concentrated on certain candidates. These are the eight positions expected to be disputed once again in the meeting, which has not set a date so far.

This list seems to have become a point of conflict between independent advisors and the government. Celeg/COPE, after having received Mr. Paes de Andrade’s documents, is still waiting for the list of the other government candidates. The government, in turn, is trying to bring forward the result of the Eligibility Committee’s analysis to know if Mr. Paes de Andrade will be approved by the company’s governance bodies. The situation has become a kind of chess game, in which each party waits for the opponent’s move to define its own move. Meanwhile, almost nothing is happening.

*Gabriela Ruddy, Francisco Góes — Rio de Janeiro

Source: Valor International

One day after the government’s decision to change Petrobras CEO – the third in little more than a year – the market’s perception of risk regarding the company’s pricing policy has increased even more. The oil company’s board of directors meets on Wednesday, and the meeting may be decisive to define how long its pricing policy will remain shielded from the pressures by President Jair Bolsonaro. Through the federal government, Petrobras’s controlling shareholder, Mr. Bolsonaro is trying to make changes in the company to hold back diesel and gasoline prices in a scenario of rising inflation and proximity to the presidential elections, in October.

Although Petrobras’s governance guarantees a certain protection, the successive attempts of government interference create uncertainty and instability around the company, in the view of sector specialists and financial market operators. On Tuesday, Petrobras’s common shares closed at R$34.40, down 2.85%, while the preferred stock stood at R$31.60, down 2.92%. The government’s measures to control prices at the state-owned company are expected to be the target of discussion in Petrobras’s board.

Caio Mario Paes de Andrade — Foto: Denio Simões/Valor

Caio Mario Paes de Andrade — Foto: Denio Simões/Valor

Valor has learned that, at Wednesday’s meeting, the oil company’s independent board members will try to postpone the extraordinary general meeting that will be called, at the request of the federal government, to replace the current CEO José Mauro Coelho, with the nominee by the controlling shareholder, Caio Paes de Andrade.

If successful, the effort will allow the company to gain up to 45 days of protection for its pricing policy. This is because, by not putting the extraordinary general meeting on the agenda at the board meeting, the burden of calling it would be shifted to the federal government, which would have to do it in the next few days.

The call for the extraordinary general meeting is one topic of the board meeting, which was scheduled even before Mr. Coelho’s dismissal. Sources linked to Petrobras acknowledge that postponing the call is not simple, especially because there is a perception that most directors are aligned with the federal government. Of the 11 seats on the board, six are nominated by the federal government, four are representatives of minority shareholders and one represents the employees.

In the ongoing changes within Petrobras, it is not yet clear whether the federal government may also change other names on the board at the extraordinary general meeting, in addition to Mr. Coelho. The government would also be interested in replacing Petrobras’s executives.

On Monday, it became clear that Mr. Coelho, the current CEO, will remain in office until the meeting is held, the date of which will only be known after it is called. There is a minimum period for holding the meeting, which is 30 days from the call. But this time can be even longer, which means that the extraordinary general meeting can take place between the end of June and mid-July, two and a half months before the first round of vote in the presidential elections. It is a shorter period than the 100 days-freeze in price hikes intended by the government.

Until the extraordinary general meeting, Mr. Coelho will remain at the head of the company, since he did not resign, but was the target of a dismissal request by the federal government. The 8.87% increase in the price of diesel on May 10 led to his dismissal. A day later, Mr. Bolsonaro fired the former minister of Mines and Energy Bento Albuquerque, to whom Mr. Coelho was linked. Without a close interlocutor in the ministry, Mr. Coelho was isolated in the government and distant from the new Mines and Energy minister, Adolfo Sachsida, who is linked to Economy Minister Paulo Guedes, as well as Mr. Paes.

Mr. Coelho couldn’t hold on to his job even in a scenario of less pressure for hikes in oil product prices. The difference between fuel prices in the domestic market and abroad has been near zero, reducing the gap, that has exceeded 20% about three weeks ago. Diesel prices at the state-run company’s refineries were negotiated Tuesday, on average, 0.4% below import parity price, according to Stonex calculations.

The Brazilian Association of Fuel Importers (Abicom) indicated an average gap of 1% in diesel oil prices. According to XP Investimentos, diesel prices are 6.7% above those seen abroad. As for gasoline, prices are, on average, 2.1% below parity, according to StoneX calculations. XP Investimentos sees, however, a discount of 11.4% in domestic prices compared to the import parity price. The last hike of gasoline prices occurred on March 11, when the state-owned company raised prices in refineries by 18.8%.

Despite Mr. Paes de Andrade’s nomination, there are doubts about whether he can fulfill the legal requirements for the position. It will be up to the People Committee, linked to the Petrobras board, to analyze his résumé. Mr. Paes de Andrade is secretary for Debureaucratization at the Economy Ministry. With a degree in Social Communication by Universidade Paulista, Mr. Paes de Andrade reports two post-graduate degrees from U.S. universities, Duke and Harvard. Before joining the government, he ran internet providers (PSTNET, Web Force Ventures and HPG) and a digital platform for the real estate market (Maber), as well as agribusiness investments. In the government, he was the CEO of Serpro, a state-owned IT company that manages government data, and secretary of privatization. Like Mr. Sachsida, who was secretary of strategic affairs at the Economy Ministry, Mr. Paes de Andrade also reported to Paulo Guedes, but was a Bolsonarist before joining the minister’s team.

The head of the Brazilian Petroleum and Gas Institute (IBP), Eberaldo de Almeida Neto, said that maintaining the fuel price policy is key to keep the market supplied and draw investments in the sector.

The executive-president of Abicom, Sérgio Araújo, said he expects Mr. Andrade, once approved, to keep the commitment with the company’s shareholders and with the market, following international prices. For consultancy Control Risks, the new change in the head of the company represents an escalation in the government’s strategy of interfering in Petrobras. Ettore Marchetti, head of investments at EQI Asset, says, however, that it is necessary to consider that many countries in the world have also made or are considering policies to cushion fuel price shocks, which is a global phenomenon. The chief economist at BV Bank, Roberto Padovani, says that the behavior of the markets suggests that they are not moving in tandem with the news. “Of course it has an impact on the stock market, but the reading is that this is another noise created in an environment of many uncertainties.”

Source: Valor International

Petrobras CEO said  company joined forces with  Equinor to develop the 4-gigawatt offshore wind project Aracatu, in the Campos Basin — Foto: Brennan Linsley/AP
Petrobras CEO said company joined forces with Equinor to develop the 4-gigawatt offshore wind project Aracatu, in the Campos Basin — Foto: Brennan Linsley/AP

Offshore wind power generation is one alternative studied by Petrobras in the long run, considering the energy transition context, CEO José Mauro Coelho said.

“Offshore wind power has great potential in Brazil and synergies with Petrobras’s operations. This is one alternative under study. There are others,” he said.

In an event about the global carbon market in Rio de Janeiro, Mr. Coelho said that the Brazilian state-owned oil company joined forces with Norway’s oil company Equinor to develop the 4-gigawatt offshore wind project Aracatu, in the Campos Basin.

Energy transition will require cooperation, he said. “Challenges of this magnitude require broad dialogue and cooperation to seek a fair transition that protects the most vulnerable ones and safeguards energy security. The achievement of climate goals is key for social welfare, economic development, and for our own competitiveness,” he said.

The executive pointed out, however, that even in the most accelerated energy transition scenarios, there will be demand for oil around the world “for decades.” “We believe that the transition will be slow and that the world will demand oil for many years.”

In this sense, Mr. Coelho pointed out that pre-salt production, in ultradeep waters, is among those with the lowest emissions and highlighted the importance of Petrobras continuing to reduce carbon emissions in oil production to be competitive.

“Our oil is produced with 40% lower emissions per barrel than the world average. Producing oil with greater efficiency and lower carbon intensity is an immediate, relevant contribution to the reduction of global emissions,” he said.

Mr. Coelho pointed out that the company also has initiatives to reduce emissions in refining. “Petrobras will have one of the most modern and sustainable refining complexes in the world,” he added.

Source: Valor International

The hike in diesel prices by Petrobras in refineries is imminent, Valor has learned. The product had, on Friday, a difference of about 20% in relation to prices on the global market. A partial recomposition of prices, in relation to the international parity, is important, at this moment, not only for Petrobras but also for other market players, such as private refineries and importers. The measure, if confirmed, will relieve the pressure on the state-owned company, and may facilitate the purchase of the product abroad by smaller companies, reducing the risk of shortages, a hypothesis that has been denied both by the company and the government.

The situation is complex, which has required discussions at Petrobras’s top management. On Friday, at the end of the day, the board of directors of the oil giant met to analyze a possible position facing the continued attacks of President Jair Bolsonaro on the company, as anticipated on Friday, Valor PRO, the real-time news service of Valor.

A response would be necessary in the face of president Bolsonaro’s virulence. On Thursday, moments before the release of Petrobras’s first quarter results, he compared the company’s profit to a “rape”. On Saturday, in Santa Rosa (state of Rio Grande do Sul), Mr. Bolsonaro criticized Petrobras again, saying that “no one can stand” the fuel increases. Informed about everything that happens in Petrobras, he speaks to his supporters knowing the limitations to intervene in the state-owned company.

Valor has found that there was no consensus in the board to produce a statement. The answer should come, therefore, in the form of a diesel hike by the company in a percentage that would cover most of the current gap. Petrobras did not immediately reply to a request for comment.

The market scenario for diesel is worrisome. On the external front, the price continues to rise as a result of the post-pandemic recovery and supply cuts resulting from the war in Ukraine. Russia accounts for about 25% of global diesel exports. The past few weeks have seen record diesel price increases in the United States.

The refining margins on diesel are twice as high as on gasoline. The increase in the price of the product in the Northern Hemisphere has effects for imports in Brazil. The diesel that will arrive in the country in July is being purchased now. But the extent to which Petrobras holds back the rise inhibits imports, since the price of the imported product arrives in Brazil at a higher price than that sold at the Petrobras refineries.

In the domestic market, the demand for diesel is still on the rise and there are concerns that the growth in consumption, driven by agribusiness, may lead to shortages in the second half of the year in some regions. The government and Petrobras have denied there is a risk of shortage of the product, which is fundamental to the farming and livestock sector and is essential in cargo transportation.

In an interview to Valor, Décio Oddone, former director of the National Petroleum Agency (ANP), also said he doesn’t believe in a shortage as long as the country follows the external price “fluctuations”.

On Friday, commenting on Petrobras’s results in the first quarter, Chief Trading & Logistics Officer Claudio Mastella ruled out the risk of shortage in the country. He said that the market is supplied by the national refining park and imports. Petrobras monitors the international markets and evaluates fuel prices daily, said Mr. Mastella.

Jose Mauro Coelho — Foto: Bruno Spada/MME
Jose Mauro Coelho — Foto: Bruno Spada/MME

Still on Friday, the CEO of Petrobras, José Mauro Coelho, said that the state-owned company is one of the companies that most collects taxes and government participation for the different spheres of government, with more than R$70 billion collected between January and March. Mr. Coelho said that the company is not insensitive to society, and cited the company’s program to help low-income families to have access to liquefied petroleum gas (LPG).

(Nelson Niero, in São Paulo, contributed to this story)

CEO José Mauro Coelho said results between January and March reflect a “healthy company” — Foto: Leo Pinheiro/Valor
CEO José Mauro Coelho said results between January and March reflect a “healthy company” — Foto: Leo Pinheiro/Valor

Oil prices, higher export volumes, lower costs in liquefied natural gas (LNG) imports and higher margins in diesel oil sales made Petrobras’s profit grow 38 times – or 3,718% – in the first quarter, to R$44.56 billion, compared with R$1.17 billion in the same period of 2021.

In a message delivered with the results, CEO José Mauro Coelho said the results between January and March reflect a “healthy company.” He also recalled that the company paid taxes to the federal government, states and municipalities equivalent to one and a half times the value of its net profit.

The company also highlighted, in a statement about the quarter’s results, that it disbursed almost R$70 billion in taxes, royalties and other payments to the federal government, states and municipalities in the first three months of the year.

The board of Petrobras approved, in a meeting held Thursday, the distribution of dividends in the amount of R$3.7155 per preferred and common share in circulation. According to the company, the total value is around R$48.5 billion.

Of the total, R$3.1387 are interim dividends referring to the remuneration paid in advance to the shareholders relative to the fiscal year 2022.

In addition, R$0.5767 per share will be paid as retained earnings included in the 2021 earnings report.

The dividends will be paid in two installments of R$1.8577, on June 20 and July 20. Shareholders who were listed on May 23 at B3 will be entitled to the dividend.

In the case of holders of depositary receipts (ADRs) on the New York Stock Exchange, the installments will be paid on June 27 and July 27. As of May 24, the shares in both markets will be negotiated without the right to the dividend.

Petrobras says that the dividend is in line with its remuneration policy, which establishes that the company can distribute 60% of the difference between operating cash flow and investments if gross debt is less than $65 billion.

Source: Valor International

Negotiation phase will now begin on the terms and conditions for the potential acquisition of Petrobras’s stakes — Foto: Leo Pinheiro/Valor
Negotiation phase will now begin on the terms and conditions for the potential acquisition of Petrobras’s stakes — Foto: Leo Pinheiro/Valor

Oil operator PetroRecôncavo and power generation company Eneva announced Wednesday they have been invited by Petrobras to continue negotiations for the acquisition of the state-run company’s stake in the Bahia-Terra cluster. The consortium formed by the two companies now enters the negotiations as “selected binding offeror.”

In March, the duo had submitted a binding offer for the set of assets.

The negotiation phase will now begin on the terms and conditions for the potential acquisition of Petrobras’s stakes in a set of concessions for onshore E&P fields and associated facilities in the Recôncavo and Tucano basins, in Bahia, the consortium said in a note.

In Wednesday’s note, the companies made it clear, without revealing values, that they have submitted a joint offer — with 40% participation by Eneva and 60% by PetroRecôncavo, the latter being the operator of the assets.

The statement confirms previous report by Brazil Journal citing sources close to the negotiations. The consortium offered $1.35 billion for the asset, according to the news outlet.

The conclusion of the deal, as well as its terms and conditions and the amount involved are still subject to the acceptance of the offer by Petrobras, the negotiation and execution of the contract, the competent legal and regulatory approvals, as well as the fulfillment of certain conditions precedent, in particular the approval of the antitrust watchdog Cade and the National Petroleum Agency (ANP).

PetroRio (PRIO3) faz "compra transformacional" e ação fecha em alta,  enquanto analistas esperam por próxima aquisição - InfoMoney

PetroRio agreed to buy a 90% stake in the Albacora Leste field, in the Campos Basin (Rio de Janeiro), from Petrobras. The company will dirburse $1.91 billion, of which $293 million have been already paid upon signing, and up to $250 million more depending on Brent prices in 2023 and 2024.

The company estimates a proven economically recoverable reserve close to 280 million barrels for the field, with a net reserve of over 240 million barrels, expected to be abandoned after 2050.

In the first 18 months of operation, PetroRio plans to invest about $150 million to increase the operational efficiency of the FPSO P-50 rig, and reap $90 million a year in synergies.

Subsequently, the field redevelopment will begin, involving the drilling or connection of 17 producing wells and five injection wells over five years, with estimated investments from $70 million to $75 million per year.

The development will be carried out in two stages. The first is the connection of three producing wells already drilled, eight new producing wells, and one injection well, increasing the field’s production to above 50,000 barrels per day.

After that, six new producing wells and four injection wells will be drilled. The company is also expected to carry out the anticipated decommissioning, until 2027, of five producing wells and one injector, with an investment of $15 million per well.

Besides the Albacoa Leste field, PetroRio is still in negotiations with Petrobras for the purchase of the Albacora field, also in the Campos Basin.

PetroRio CEO Roberto Monteiro said the sale is taking longer because of the discovery of the Forno reservoir, located in the pre-salt within the field. The area is currently undergoing a long-term test for estimates of production potential, which showed better-than-expected results, according to the executive.

“We still have a while to reach an agreement, especially regarding the amount. It is taking a little more time because this reservoir is larger than expected,” he said.

The sale of the asset is part of Petrobras’s divestment plan and began in September 2020. According to Mr. Monteiro, a binding proposal was delivered around September 2021, but in November Petrobras asked the bidders to revisit the estimates for the size of the reservoir. In addition to PetroRio, there are other companies competing for the area.

Source: Valor International