Petrobras, Brazils state-controlled oil company, is
aiming almost to triple its proven reserves of oil within the
next three years, and may get a further upgrade in its credit
rating by Moodys.
The US rating agency promoted Brazils sovereign debt
to investment grade late last month and put Petrobras on a
positive outlook from its current investment grade Baa1.
Petrobras chief financial officer Almir Barbassa told
Emerging Markets that the upgrade may happen
within a year if everything goes according to plan.
Petrobras, the largest listed company in Latin America, has
a leverage ratio of 28%, while the ideal range stands
somewhere between 25% and 35%, Barbassa said.
The government intends to increase the Petrobrass
capital in order to boost its financing capacity. The
states additional stake will be equivalent to the value
of 5 billion barrels of the new reserves.
The most critical issue will be the valuation of the
price of the barrel, Barbassa said. Minority shareholders
will have to put more cash upfront if they do not want their
stakes to be diluted.
Not all of them are expected to subscribe to the
offer. The Brazilian government may end up with more than 50%
of Petrobras capital, but it is not relevant because it already
has the control of the company [with more than 50% of ordinary
shares], he said.
Proven reserves stand at 14 billion barrels and may jump to
40 billion once the new deepwater deposits discovered off
Brazils Atlantic coast are added. This amounts to
some 40 years of reserves, on the basis of production of 3
million barrels per day, Barbassa said.
Barbassa has been courting investment bankers on the fringe
of the IMF/World Bank meetings in Istanbul, to whet financial
investors appetite ahead of the implementation of a new
regulatory model for the exploration of the deepwater
The model, to be voted on by Congress in the coming weeks,
strengthens the position of the company, whose monopoly in the
oil sector in Brazil was only broken 12 years ago.
If approved by Congress, Petrobras will be the sole operator
of all the so-called pre-salt fields those in ultra-deep
waters, below a thick layer of salt and would have a
minimum stake in all of them.
Several foreign operators, which have been operating in
Brazil for several years, are miffed. The problem with
this system is that it is going to relegate other companies in
the industry to a totally secondary role, said Joao
Carlos de Luca, president of the Brazilian oil institute
We have to leave some space for other companies to
operate. Let us leave the great clusters to Petrobras, but let
us leave some space for the others, he added after a
conference in Brazil last month.
The rise and rise of Petrobras in the oil industry
coincides with an intense campaign to boost Brazils
position on the international stage. The Brazilian financial
minister Guido Mantega confirmed on Sunday that the Brazilian
central bank will purchase IMF notes of up to $10 billion,
which will turn Brazil into an IMF creditor.