NEW YORK (Dow Jones Newswires), Nov. 18, 2011
In spite of the international credit crisis, Brazil's government-run oil company, Petrobras has already received dozens of offers from oil companies interested in buying the $13.6 billion in assets it intends to sell, Petrobras CEO Jose Sergio Gabrielli told Dow Jones Newswires on Friday.
He said the company is now deciding whether to sell the assets separately or in blocks.
"We have several important offers right now. Our problem is not lack of offers; on the contrary, we have to decide the best strategy to sell," he said in an interview following a seminar organized by Brazil's Banco Bradesco in New York. Gabrielli did not disclose the names of the companies interested or the specific assets.
Earlier this year, Petrobras announced the divestment program, part of its 2011-15 business plan. The oil company needs to raise between $67 billion and $91 billion in the next five years to pay maturing debt and finance its heavy schedule of investments.
The company is now analyzing market conditions and might also tap the international debt market before the end of the year. But, according to Gabrielli, Petrobras is not in a hurry to complete any sales. "We have a big cash balance right now, and we really don't need to raise money in the short run for liquidity purposes. But, if we find the opportunity, we are going to do something," he said.
According to Gabrielli, Petrobras has not yet decided specific details for the sales, but he said offers might not be dollar-denominated.
In the third quarter, Petrobras's earnings were hit by the Brazilian real's slide against the dollar. The company's net profit fell 26%, from the same quarter in 2010, to BRL6.3 billion ($3.5 billion). Going forward, Gabrielli said Petrobras expects a stable exchange rate. For its five-year plan, the oil company is working with an exchange rate of BRL1.73 to the dollar. Late Friday, the real was trading at about BRL1.77 to the dollar.
Gabrielli said Petrobras is a natural hedging company because most of its costs are dollar-linked. The impact on the third quarter was mainly due to a debt in U.S. dollars. The impact was basically on an accounting basis, but there was no impact on a cash basis, he added.
Despite concerns about the economy in developed countries, Petrobras sees a trend for increasing demand in global oil consumption in 2012. Gabrielli predicted further reductions in demand in Europe, the U.S. and Japan, with the exception of fuel oil due to the slide in local nuclear energy production, but higher demand in developing countries in Asia, South America and Africa. "This is going to continue in 2012, and this is going to more than offset the reduction in the developed countries," he said.
He said that by year-end Petrobras will be producing more than the average target of 2.1 million barrels a day of crude oil. The company intends to produce 3.9 million barrels a day by 2015.
Copyright (c) 2011 Dow Jones & Company, Inc.
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