Petrobras Unveils New Spending Plan

Printer Friendly Version

Petrobras, Brazil's state-run oil producer, said it will invest nearly $225 billion from 2011 through 2015, a number that is roughly inline with the $224 billion spending plan the company announced last year for the five years ending 2014. All but 5% of that total will be devoted to domestic spending.

Petrobras (PBR) also boosted its 2011 budget to $60 billion from $54.5 billion. The company has come under fire from analysts and investors for what is viewed as an overly ambitious budget that has hampered the company's share price. Last year, Petrobras sold $70 billion in new shares in the largest share sale ever.

As part of previous proposals, Petrobras had reportedly asked to be allowed to raise domestic gasoline and diesel prices to generate additional revenue, according to the Wall Street Journal. Brazil's government, the largest Petrobras shareholder, usually does not permit the company to raise gas prices in an effort to control inflation.

Petrobras said that it will likely need between $7.2 billion and $12 billion per year to fund the 2011-2015 plan, depending on economic factors, the Journal reported. That could mean additional bond sales, which the company said it would commit to earlier this year, but that it would not issue bonds denominated in U.S. dollars.