Petrobras Posts 2004 Net Profits of US$6.5bn

Brazil's federal energy company Petrobras (NYSE: PBR) posted net profits of 17.9bn reais (US$6.5bn) in 2004, up from 17.8bn reais in 2003 due to higher operating profits, partly offset by non-operating losses, the company said in a statement.

Petrobras posted a 4.57bn-real net profit in the fourth quarter of 2004 alone, up 51% from 3.02bn reais in 4Q03. Despite a slight drop in oil and gas output volume, Petrobras' operating profit increased 8% to 29.8mn reais in 2004, while Ebitda rose 10% to 36bn reais. Gross revenues rose 14% to 150bn reais spurred by higher domestic and international oil prices, the statement said.

Non-operating losses were 2.42bn reais in 2004 compared to profits of 1.35bn reais in 2003, mainly due to the effects of the lower appreciation of the real in 2004 relative to 2003 and the behavior of the Argentine peso against a basket of foreign currencies.


The company's total oil and gas output fell 1% to 2.02 million barrels of oil equivalent (Mboe) in 2004 from 2.04Mboe in 2003, mainly due to lower domestic oil production. Domestic oil production fell 3% to 1.49Mboe while domestic natural gas production rose 6% to 265,000boe, the statement said.

The lower oil production was due to scheduled and unscheduled production interruptions and closures of some wells in the Campos basin. The delay in deliveries of the P-43, P-48 and P-50 platforms to the Barracuda, Caratinga and Albacora Leste fields respectively also contributed to the lower production.

Meanwhile, international oil production increased 4% to 168,000boe while gas production rose 11% to 94,000boe due to higher oil production in Venezuela, and increased gas production in Bolivia reflecting Brazilian demand and the start of sales of Bolivian gas to Argentina in June 2004.

Petrobras' total output of oil products increased 4% to 1.8Mboe in 2004 while sales rose 5% to 1.59Mboe, led by growth in diesel and gasoline sales offset by lower fuel oil sales.

The higher output was due to the modernization and expansion of Petrobras' refineries RLAM, Revap, Regap and Replan in 2003, reflecting better operating performance in 2004, the statement said.

Meanwhile, net imports of crude oil, oil products, gas, alcohol and fertilizers increased 339% to 268,000boe in 2004. The average oil price in Brazil increased 24% to US$33.49/b in 2004 from 2003, while the international price increased 16% to US$26.36/b. The natural gas price rose 10% to US$11.56 per million cubic feet in Brazil and was up 2% internationally to US$6.96/Mft3.


Lifting costs without government participation increased 27% to US$4.26 a barrel in 2004, from US$3.36/b in 2003 due to higher expenses for technical services in areas such as well restoration and oil transport, higher expenses for chemical products, increased maintenance costs and higher expenses for salaries and benefits.

The international lifting cost increased 6% to US$2.60/b due to increased expenses for personnel, materials and third-party services in Ecuador and Argentina.

Petrobras' refining unit cost increased 18% in Brazil to US$1.34/b because of higher salaries, expenses for health and pension plans as well as scheduled costs for future stops and maintenance at its refineries.

Petrobras' refining unit cost rose 3% internationally to US$1.21/b due to higher expenses for personnel, materials, maintenance and third-party services, mainly in Argentina.


Petrobras invested 21.8bn reais in 2004, up 22% from 18.5bn reais in 2003, not counting project finance investments. The increase was largely in developing its oil and natural gas production capacity and in the distribution segment through the 865mn-real acquisition of Liquigás Distribuidora, formerly Agip do Brasil.

Petrobras invested 12.4bn reais in exploration and production (E&P) last year, a 42% increase from a year earlier.

Investment in downstream operations rose 268% to 1.2bn reais, while investment in international operations rose 19% to 2.3bn reais. The company, however, cut investments in refining and petrochemicals by 17% to 3.9bn reais, while it reduced investments in its power and natural gas business segment 44% to 625mn reais from a year earlier.

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