Petrobras delays strategic plan; receives investment offers

Brazil's Petroleo Brasilerio SA (Petrobras) continues to review its 2009-13 strategic plan, with no deliberation taking place yet at the board level, according to an official report.

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Dec. 8 -- Brazil's Petroleo Brasilerio SA (Petrobras) continues to review its 2009-13 strategic plan, with no deliberation taking place yet at the board level, according to an official report.

Even as the company firms up its plan, however, government officials claim to have no concern over funding, especially as substantial offers of finance are coming in from other nations such as China and the UAE.

"The company is finalizing the review of its strategic plan," Petrobras said in a filing with stock regulators. "Until now, there has not been any deliberation by neither executive directors or nor the board of the company about the plan."

Mines and Energy Minister Edison Lobao told the state news agency that the plan was still due to be released by yearend—changing earlier dates announced by Petrobras downstream director Paulo Roberto Costa, who said the board would meet by Dec. 19 or 20 to discuss and finalize the document.

In October, Petrobras delayed the release of its 2009-13 strategic plan, which is to include the company's first investments in the subsalt region, due to worsening global market conditions.

However, in this week's filing with the regulators, Petrobras said current market conditions would not significantly affect the company's investment plans.

The company's current strategic plan, released in 2007, envisioned investments of $112 billion during 2008-12.

"Throughout its long history, Petrobras has confronted various adverse conditions that did not create obstacles for development of its long-term growth strategies," Petrobras said.

"In spite of the international financial crisis, the company was capable of raising $7.5 billion throughout 2008 to finance its investments," Petrobras said.

Upbeat mood prevails
The firm's upbeat mood this week echoed remarks on Dec. 5 by Petrobras Chief Executive Officer Jose Sergio Gabrielli, who said that new strategic planning—"to be announced at the end of the year"—will be for investment above current plans of $19.5 billion/year.

"The next plan will probably have investment at over $20 billion annually," Gabrielli told delegates at the Annual Chemical Industry Meeting held by the Brazilian Chemical Industry Association (Abiquim).

Gabrielli said that the company's 2008 investment is expected to come in at over $50 billion reais, a figure that should be surpassed in 2009.

The Petrobras announcement this week coincided with statements by Lobao that China and the UAE have offered Brazil resources to fund production from its potentially huge offshore oil fields.

"China is offering Petrobras $10 billion initially," Lobao said in an interview published Dec. 8 by the daily Folha de Sao Paulo. "We also received a representative of a prince in the [UAE], which also wants to invest in Petrobras."

China made its offer in talks with Petrobras attended by Energy Ministry representatives, said Lobao, who added that the funds would be destined for the company's investment plans and development of the presalt layer.

Responding to questions about the Brazilian company's plans amid the global credit crisis, Lobao said that Brazil has "several other alternatives" to fund Petrobras's investment plan and pay for production from the pre-salt layer.

Among the alternatives, Lobao named domestic loans, foreign loans, the government budget and the "possibility of using part of the country's foreign exchange reserves," which are estimated at around $207 billion.

Meanwhile, Gabrielli said that Petrobras will start to test oil exploration in the presalt areas of the Santos basin as of March 2009. The testing period will last 18 months, he said, and initially will aim to produce 15,000-30,000 b/d.

Last month, Brazilian officials issued conflicting statements concerning the potential impact of the current global financial crisis—as well as other issues—on the exploration and development of the country's subsalt layer (OGJ Online, Nov. 24, 2008).

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