This is an annual average investment of US$7.7bn, up 12% from the US$6.9bn annual average projected in the 2003-07 strategic plan, in which the production goal was 2.2mb/d.
The company's exploration and production (E&P) investment is projected at US$32.1bn while US$11.2bn will be spent on refining and transport of oil. The company plans to invest US$6.1bn in gas and power activities, or about three times the amount it planned to invest in the previous strategic plan.
Petrobras will also invest US$1.7bn in its fuel retail operations and US$1.1bn in the petrochemicals sector. Additionally it will invest US$1.1bn in the corporate sector, the statement said.
"This doesn't change things very much, but I didn't like it when the company raised the amount it plans to invest in gas and power," UBS Warburg analyst Marcelo Mesquita told BNamericas. "This is an area in which the company is losing money and it would be same as putting money in a black hole."
In 2003, Petrobras invested 18.5bn reais (US$5.9bn). E&P accounted for 8.8bn reais, refining 4.7bn reais, gas and power 1.1bn reais and fuel retail operations 332mn reais. In 2003, the company's gas and power area posted losses of 1.3bn reais, reducing the company's 17.8bn reais net profits that year.
In the first quarter 2004, the company continued to lose money in this area, posting a 335mn reais loss. Behind the losses are investments in gas-fired generators which were either switched on for very little time or faced construction delays because of Brazil's lower power consumption following the 2001-2002 rationing, which cut the demand for marginal power from the relatively more expensive gas-fired power in Brazil's predominantly hydroelectric system.
Behind the investment decision in the strategic plan is the government's decision to develop the country's natural gas market to make the exploration of Petrobras' 400 billion cubic meter Santos basin reserves viable. This is one of five guidelines in the strategic plan: the other four are consolidation and expansion of Petrobras's competitive advantages in the domestic and South American markets; international expansion; selective expansion in the petrochemicals market; and investment in renewable energy sources. "The money should go to exploration and production to produce the gas. The new target for increasing oil production was not raised very much," Mesquita said. The company said it would detail the plan further in the next few days.
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