RIO DE JANEIRO (Reuters) - Petrobras’ new chief executive, Maria das Gracas Foster, said on Monday her concern is to increase oil and gas output but she did not plan to expand the investment budget for Brazil’s state-run oil company.
Petrobras (PETR4.SA) has struggled to bring new deepwater oil fields on-stream in recent years as unplanned stoppages on aging platforms, delivery delays and tighter safety regulations crimp its goal of becoming the world’s No. 3 oil producer, after Russia and Saudi Arabia, over the next decade.
Foster, a 30-year company veteran, took over the helm of Brazil’s most important publicly traded company on Monday from outgoing Jose Sergio Gabrielli, who will start a political career in the state of Bahia.
“Production targets have always been a priority in Brazil for Petrobras,” Foster told reporters. “I‘m working within my priority of exploration and production.”
She added, however, that oil spills such as the Deepwater Horizon disaster in the Gulf of Mexico and a series of more recent spills in Brazil, including one by U.S. oil major Chevron (CVX.N), have increased regulatory scrutiny for the sector.
“I‘m prepared to delay targets to meet safety requirements,” Foster said.
E&P received the lion’s share of Petrobras’ 2011-2015 $225 billion investment budget, the biggest of any company in the sector. Foster said the plan would be revised but it scope would remain roughly the same.
“The plan is a reflection of our financial and physical capacity to invest,” she said. “What’s in the 2011-2015 plan will be maintained.”
Analysts have criticized the company for its plans to build five new refineries, rather than focusing on areas that produce better returns on investment, even though Brazil clearly has a shortfall in domestic refining capacity.
While demand for fuels has grown steadily over the past 10 years from Brazil’s fast growing automobile fleet, Brazil has not built a new refinery in decades.
Petrobras posted its fourth-quarter results on Friday, reporting a 52 percent drop in net earnings and disappointing market expectations, in part because of its need to import record amounts gasoline to meet local market demand.
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The government, Petrobras’ controlling shareholder, has resisted gasoline and diesel price increases over the past eight years at the pump in an effort to control consumer inflation.
Meanwhile, the international price of oil has increased by 190 percent over the same period.
The company’s refining division posted losses which rose 39 percent to 4.41 billion reais in the fourth quarter from losses of 3.16 billion reais in the third quarter.
Gasoline demand growth, combined with price controls, is forcing the company increasingly to buy gasoline at international prices and sell it at a loss domestically.
Foster said that Petrobras has decided to reject the international price of oil within Brazil to guarantee a strong domestic market demand for when its new refineries come on.
“I want a big market, scale, to be ready for my four new refineries,” Foster said. One of the five new refineries is for the production of petrochemicals and not principally fuels.
Petrobras is rethinking it refining plans, which initially, after the discovery of massive offshore reserves known as the subsalt, were to refine crude from the offshore fields into high quality, value added fuels and products for export.
It is now revising this plan to build two of the refineries so that they produce fuels suitable for lower quality domestic market fuel demand.
Reporting by Jeb Blount; Writing by Reese Ewing; Editing by Marguerita Choy