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Petrobras to increase diesel prices

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)

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Petrobras exceeds expectations with profit of R$44bn

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

https://valorinternational.globo.com

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Petrobras invites Eneva, PetroRecôncavo for Bahia-Terra cluster

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).

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PetroRio agrees to buy Albacora Leste field from Petrobras

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

https://valorinternational.globo.com

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Government picks Ferreira Coelho to run Petrobras

José Mauro Ferreira Coelho — Foto: Leo Pinheiro/Valor
José Mauro Ferreira Coelho — Foto: Leo Pinheiro/Valor

After setbacks in the last few days, the government managed to appoint José Mauro Ferreira Coelho as Petrobras’s CEO and Márcio Andrade Weber as chair of the state-owned oil company.

The two positions were open after Adriano Pires and Rodolfo Landim gave up, this week, to run for these positions, respectively. The new names were seen by sources familiar with Petrobras as a victory for Mines and Energy Minister Bento Albuquerque, to whom the company is subordinated. “Bento has succeeded,” a source said.

Mr. Coelho is supported by his technical background in the industry – he chairs the state-owned company PPSA –, while Márcio Weber, the new candidate to be Petrobras’s chair, was an “internal solution” since he is a member of the current board of the oil company. He has experience in the oil market and enjoys the respect of the board members.

Coelho has a military background, having been an officer in the Army between 1983 and 1991, and a researcher at the Military Institute of Engineering. He also held the board of the Energy Research Company (EPE) and was secretary of oil and gas at the MME before joining the PPSA board. He has defended the practice of parity to international prices, a policy that Petrobras has followed since the Temer administration and that has been a frequent reason for the company’s wear and tear with President Jair Bolsonaro. The last two presidents: Roberto Castello Branco and Joaquim Silva e Luna were fired for readjusting fuel prices in the domestic market following oil variations in the international market. Silva e Luna remains in the presidency of the company until next week.

After the frictions caused by the nomination of Adriano Pires, Mr. Coelho’s announcement was seen as a new demonstration of strength by Mr. Albuquerque. Mr. Coelho was seen as his right-hand man in the ministry and, with this appointment, the minister will have two names of his trust in strategic state-owned companies in the sector: Itaipu and, now, Petrobras.

The two nominations pave the way for Petrobras shareholders to elect the company’s new board of directors at the Annual and Extraordinary General Meeting (AGOE) scheduled for next Wednesday. Since the retreat of Messrs. Pires and Landim, the federal government’s ticket was incomplete. From the original eight names, six were left. On Tuesday night, the ministry said that it had filled out the list of the federal government, the company’s controlling shareholder, for the board.

The ticket is now composed by Márcio Weber, José Mauro Ferreira Coelho, Sônia Villalobos, Ruy Schneider, Luiz Henrique Caroli, Murilo Marroquim, Carlos Eduardo Lessa Brandão and Eduardo Karrer. There are also seven candidates of suggested by minority shareholders for the board.

There are, therefore, 15 candidates for ten seats. The federal government’s candidates must face two minority shareholders’ candidates in a multiple-choice system in which the individual candidates with the most votes win. The remaining minority shareholders’ candidates will face each other in two elections in which the federal government does not vote.

One is in the separate election of the controlling shareholder related to the common shares (three names for one seat) and the other related to the preferred shares (two candidates for one seat). Petrobras’s board has 11 members, but the 11th person is elected by the employees. The name is Rosangela Buzanelli Torres, who is also already on the board. The mandate is for two years, until the 2024 general meeting, but with presidential elections ahead, chances are the board will be changed again next year.

It is not clear yet if there will be enough time until next week’s meeting for the names of Messrs. Coelho and Weber to be evaluated by Petrobras’s corporate governance bodies, responsible for analyzing if the names fit the company’s rules and the Law of State-Owned Companies. The eligibility committee (Celeg), linked to the people committee (COPE), can make this analysis in time for the meeting. “I believe they will try to do it,” a source said. If it is not possible, this check can be left for after the meeting. Mr. Weber’s name has already been checked, since he was on the first federal government list and is a candidate for reelection.

On Wednesday, Celeg concluded that Mr. Weber meets the necessary requirements and has no restrictions to run for the board. The committee said, however, that Mr. Weber will need to “adopt the necessary measures so that the company in which he has a stake formally abstains from providing services to Petrobras and its equity stakes, as well as relevant suppliers and competitors in the oil and gas sector”. Mr. Weber advises the PMI group that operates four deepwater drilling rigs that have Shell and ENI as clients.

Source: Valor International

https://valorinternational.globo.com

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Petrobras to keep prices in line with international market

Oil giant states it will avoid passing on “external volatilities”

05/03/2022

Petrobras confirmed that it will maintain its commitment to keep fuel prices in Brazil in line with the international market — Foto: Divulgação

Petrobras confirmed that it will maintain its commitment to keep fuel prices in Brazil in line with the international market — Foto: Divulgação

Petrobras confirmed that it will maintain its commitment to keep fuel prices in Brazil in line with the international market. In a statement after being asked about possible readjustments with the rise in the barrel prices due to the crisis in Eastern Europe in recent days, the oil company, however, noted that it will avoid passing on external volatility and the exchange rate caused by broader events.

“The international market was already experiencing high volatility, and the latest events have caused even more volatility. Petrobras continues to monitor and evaluate the impacts on fuel prices and cannot anticipate any decision on adjusting or maintaining current prices,” stated the company.

The company pointed out that the national fuel market is also supplied by other companies, such as importers, distributors that are authorized to import, in addition to other producers and importers of biofuels and other refiners. As a comparison, Petrobras points out that in 2021 the company met about 44% of the demand for type A gasoline from distributors, with the rest being produced or imported by other players.

The state-owned company has not updated fuel prices at refineries for 49 days, despite the recent rise in barrel prices on the international market after the Russian invasion of Ukraine.

Source: Valor International

https://valorinternational.globo.com
https://valorinternational.globo.com
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Petrobras reports record net income

Oil company proposed another dividend distribution, amounting to R$37.3 billion — Foto: Geraldo Falcão/Agência Petrobras
Oil company proposed another dividend distribution, amounting to R$37.3 billion — Foto: Geraldo Falcão/Agência Petrobras

Petrobras reported record annual net income of R$106.7 billion relative to 2021. The result, 15 times higher than the 2020 earnings, came above the R$100 billion projected by analysts.

After a new solid earnings report, that of the fourth quarter, the company proposed another dividend distribution, amounting to R$37.3 billion, to be paid in May. In the end, the remuneration to shareholders for the results achieved last year will total R$101.4 billion, the oil company’s highest ever. The federal government, which controls the company, will receive about a third of this.

Benefiting from the appreciation of oil, the company earned R$31.5 billion in profits in the fourth quarter, down 47.4% year over year. At the time, the state-owned company’s results were strongly inflated by the reversal of impairments. When compared to the third quarter of 2021, there was an increase of 1.2% in the result.

In the year of 2021, the record profit was linked to the 77% increase in the price of Brent oil, in reais, in the period. Two other factors boosted the result: the higher sales volumes in the domestic market and better diesel and gasoline margins – which offset the drop in oil exports, the increase in liquefied natural gas (LNG) acquisition costs due to the water crisis and a revision in health insurance plans.

Petrobras’s net revenues totaled R$134.19 billion in the fourth quarter, up 79% year over year. In 2021, revenues totaled R$452.7 billion, 66.4% more than the previous year. The EBITDA, on the other hand, grew 33.8% in the fourth quarter, to R$62.9 billion, in comparison with the months from October to December 2020; and 64.1% in the year, to R$234.6 billion.

Source: Valor International

https://valorinternational.globo.com

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Petrobras could reach record profit, boosted by oil prices

Petrobras platform — Foto: Divulgação

Leveraged by the appreciation of oil prices, Petrobras is expected to disclose on Wednesday, after the closing of the markets, a robust earnings report, relative to the fourth quarter of last year, according to analysts. The expectation is that, even with the 2.8% drop in oil and gas production in 2021, the company will close the year with record annual profit – which makes room for it to pay more dividends to shareholders.

Until then, the best annual result by Petrobras was in 2019, when the oil company closed the year with a profit of R$40.137 billion. The company accumulates a net profit of R$75.16 billion in the first nine months of 2021 and is on track to reach a new milestone.

The year 2021 marks a turning of the page in Petrobras’ financial restructuring process. It was when the company reached in advance the goal of reducing gross debt to less than $60 billion. The achievement was made possible, above all, by the oil company’s strong cash generation — a scenario that should be repeated in the fourth quarter results. The Institute for Strategic Petroleum Studies (Ineep) estimates, for example, that the company’s free cash flow should total R$45.6 billion in the fourth quarter.

Analysts’ projections indicate that Petrobras is likely again present solid financial indicators. According to the average of the projections of the four banks consulted by Valor (BTG, Credit Suisse, Goldman Sachs and UBS BB), the oil company is expected to report a R$ 69.8 billion EBITDA for the period between October and December. The amount is 48.3% higher than that calculated in the same period of 2020 and 14.9% higher than in the third quarter of 2021.

For Goldman Sachs, a most expensive barrel should be the main driver of the exploration and production segment, the company’s flagship. The bank’s forecast is that E&P’s EBITDA will grow 10%, in dollars, compared to the third quarter, despite the 3.9% reduction in the company’s total oil and gas production on the same comparative basis. The Brent barrel was priced, on average, at $79 between October and December 2021. For comparison purposes, in the same period of 2020 the commodity was traded, on average, at $44.2 a barrel, while, in the third quarter of last year, the average price was $73.5.

The company’s revenues is expected to total around R$129 billion in the fourth quarter, up 72.1% in the annual comparison and 6.1% compared to the third quarter.

Petrobras is expected to see expressive net income in the fourth quarter, R$25.8 billion, according to the average of the banks’ projections. This number could be substantially higher, according to Ineep, if the oil company makes a new reversal of write-offs due to loss in the value of assets and investments (impairments), as it did in the third quarter of 2021, due to the appreciation of oil.

The positive result expected for the fourth quarter should be reflected in new dividend distributions to shareholders. In 2021, Petrobras paid a total of $12 billion in advance payments, related to the year’s results. The amount is almost double what the company distributed in total between 2018 and 2020.

Credit Suisse estimates that Petrobras will be able to distribute up to $5 billion in dividends related to the fourth quarter, as a reflection of organic cash generation and non-recurring effects. At the end of 2021, it is worth remembering, the company concluded important divestments, such as the one from the RLAM refinery (state of Bahia) to Mubadala, for $1.8 billion. On the cash outflow side, the payment of dividends in December is expected to be highlighted. BTG cites, in turn, that Petrobras’ “comfortable leverage position could mean that additional dividends could be in the horizon”.

Goldman Sachs makes a counterpoint stating that, although there is room for remuneration to shareholders based on the results of the fourth quarter, the company may eventually decide to wait for the results of the first quarter of 2022 to have better visibility of cash generation and only then proceed with new payments. The bank estimates that Petrobras could announce up to $7 billion in new dividends for the first three months of the year.

For 2022, analysts expect earnings to be even higher, since the company is no longer so strangled by debt — reduced by $70 billion since 2014. UBS BB estimates that, without considering divestments, Petrobras’ dividend yield is expected to be 19% in 2022, the highest index, alongside Russian Gazprom, among the 20 international oil companies analyzed by the bank. The dividend yield is a ratio between the dividends paid by a company in a given period and the individual share price and measures the company’s performance in terms of shareholder remuneration.

In November, Petrobras’ CFO Rodrigo Araujo said he expects to start, in the first quarter of 2022, the new dividends policy – which foresees paying an amount equivalent to 60% of the difference between operating cash flow and investments. The formula will be activated when the gross debt is equal to or less than $65 billion and there is accumulated profit. Under the new rules, payment must be made quarterly.

Source: Valor International

https://valorinternational.globo.com

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Brazil’s Petrobras met output goals in 2021

Rio de Janeiro – Brazil-based oil company Petrobras announced on Thursday (9) it met all its output goals established for 2021, posting several record numbers, including pre-salt results, with an annual average 1.95 million barrels of oil equivalent per day, accounting for 70% of the company’s total output.

“Our pre-salt production has been growing fast, and the record high posted is more than twice the volume we used to produce in this layer five years ago,” Petrobras chief production development officer João Henrique Rittershaussen said.

“The magnitude of these results shows Petrobras’ commitment to meeting its goals and its focus on deep- and ultradeep-water assets, which have shown a large competitive edge by producing low-cost, high-quality oil with low greenhouse gas emissions,” the company’s chief exploration & production officer, Fernando Assumpção Borges, said.

Petrobras also highlighted 2021’s 8.5% growth in oil derivative sales from 2020, with an emphasis on the increase of gasoline, diesel and jet kerosene sales, which was mainly due to the heavy impact of the novel coronavirus pandemic on sales back in 2020. Year on year there was also smaller third-party gasoline and diesel imports, thus resulting in an increase of the company’s market share.

Petrobras posted an annual record high of S-10 diesel sales and output in 2021, thus ensuring better environmental and economic results for users. Sales of S-10 diesel increased by 34.7%, while output was up 10%.

Translated by Guilherme Miranda

Source: NewsNow

https://www.newsnow.co.uk/h/Business+&+Finance/Economy/International/Brazil

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Petrobras analyzes opportunities to enter new markets

Política de Bolsonaro tornou Petrobras mais vulnerável a crises – RBA

Petrobras is analyzing opportunities in markets such as small nuclear power plants, geothermal energy and different types of wind and photovoltaic energy. While participating in the Latin America Investment Conference 2022, promoted by Credit Suisse on Thursday morning, the CEO of the state-owned company, Joaquim Silva e Luna, mentioned for the first time some of the areas that are under study by the company in the energy transition scenario. Side by side with the CFO and head of investor relations, Rodrigo Araujo, Mr. Silva e Luna also reiterated that the company maintains its intention to relaunch the processes of refinery sales that have been closed without success.

Mr. Araujo confirmed that the company’s idea is to relaunch the divestments of the Alberto Pasqualini Refinery (Refap), in Rio Grande do Sul, and for the Presidente Getúlio Vargas Refinery (Repar), in Paraná. The executive did not give details about the deadlines. Petrobras signed an agreement in 2019 with antitrust watchdog Cade to sell eight refining assets outside the Rio-São Paulo axis by the end of 2021. With the pandemic, however, the processes have been delayed.

With the changes in the energy market, Petrobras’ current focus is on “the best production with the lowest carbon level,” the CEO said. “We have a commitment, an ambition aligned with the Paris Agreement, in which we have a commitment to reduce emissions from our operations by 25% by 2030,” he said.

In the CFO’s view, the company has a competitive advantage in areas such as high technology and large-scale projects “We have to analyze what kind of investment we can make for the energy transition. I understand that petroleum will still be a source that will last for a long time,” added Mr. Araujo.

There are no specific resources allocated to new energy sources yet, but studies on the company’s entry into new markets are underway at the oil company’s research center.

The CEO said that Petrobras has an expected value for the decarbonization set as a whole and does not look specifically at one project. “We don’t think about any kind of investment without the clarity that it will have a return,” Mr. Silva e Luna added.

According to the executive, Petrobras has learned from past problems to strengthen governance. “We try to make technical collegiate decisions, building a collective will about our decisions and not letting external pressures influence them,” he said.

On fuel prices, Mr. Silva e Luna said that the company has social responsibility, but that it cannot make public policy. “Our focus is on generating value for our shareholders, investors, the federal government and for society in general,” he said.

According to him, Petrobras management is committed with the investors. In the last five years the company has paid more than R$1 trillion in taxes. According to the CFO, there is comfort with the leverage of the oil company in terms of capital structure. “We see possibility and dividend return much higher than in the past, to have a more consistent and robust distribution,” he said.

Source: Valor International

https://valorinternational.globo.com

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