Expectations for the third quarter net profits of Brazilian oil giant Petrobras (NYSE: PBR) are for a decline. Petrobras profits are expected to be hurt by a sharp depreciation in Brazil’s real as well as disparities between domestic and international fuel prices.
The oil company is under pressure from government worried about high inflation to sell fuel at lower prices than what it costs Petrobras to import the fuels from overseas. This is raising questions about the company’s ability to actually fund its very ambitious $224.7 billion investment plan to develop its offshore pre-salt oil fields through 2015. The Estadao newspaper noted today that Petrobras has enough cash to fund its capital expenditures through 2012 only.
CEO Jose Sergio Gabrielli said today Petrobras is considering disposing of its Japanese oil refining unit, Nansei Sekiyu, located on Okinawa. This refinery has been operating at well below its capacity of 100,000 barrels a day for many years. If Petrobras can find a willing buyer, Mr. Gabrielli said the company would be happy to sell Nansei Sekiyu in its entirety.
Source: Emerging Money