"This is an authoritative budget, included in the government's planning, but it doesn't mean we will invest that much," he said. "We are detailing the investments and will announce our strategic plan through 2008 at the end of the first quarter or at the beginning of the second."
The government's budget includes an exchange rate forecast of 3.25 reais to the US dollar, he said. The company has previously said it will invest about US$8bn this year, of which about US$2bn will be in the gas and energy sectors, as the government included Petrobras in its plan to increase natural gas demand in Brazil to make the exploration of its 419 billion cubic meters of gas reserves more feasible. Part of the investment will go towards increasing its participation in gas-fired power generation, which is expected to cause a 1.6bn reais loss this year.
"We are in negotiations with our partners to change contracts and ownership relations," Gabrielli said. Additionally, Petrobras wants to increase its presence in the liquefied petroleum gas (LPG) market, but Gabrielli would not comment on reports that Petrobras is in talks to acquire control of Agip do Brasil from Italian parent Eni.
In its core business, Petrobras continues with plans to reduce lifting costs to US$ 2.8/b by 2007. Gabrielli said this would happen only from end-2004, when production will start increasing. Refining is also expected to increase in 2004 after a slight decline because of maintenance stoppages in some refineries that reduced output.
On the financial side, Gabrielli said the company's indebtedness is in line with its cash generation capacity, with its net debt declining to 34.6bn reais in December 2003 from 35.8bn reais a year earlier. He said last year's results strengthen the company's argument to seek permission from shareholders to increase capital. "We will continue to post large profits so we will need to raise our capital limit to 60bn reais from the current 30bn reais, since we are already past the limit with 33bn reais," he said.
The company's strategy includes plans to sell US$2bn in shares, the timing of which depends on market conditions.
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