Petrobras expects crude oil production at low end of revised target

2/6/2013

Petrobras expects crude oil production at low end of revised target

BY JEFF FICK

RIO DE JANEIRO -- Petrobras expects 2013 to be a difficult year, as it pursues a turnaround strategy that still needs time to show concrete results, the firm's CEO said. At stake is the company's ability to stick to production goals while simultaneously undertaking a program that will require $237 billion of spending over the next five years.

Since taking office last year, CEO Maria das Gracas Foster has sought to play down production expectations that had become overblown after a series of mammoth oil discoveries off the country's southeastern coast. But Petrobras even risks falling short of its revised target of 2.02 MMbopd, plus or minus 2%. Petrobras just hit the low end of the target last year with crude output of 1.98 MMbopd, and Ms. Foster expects production to be similar in 2013. "It's not going to be physically possible for us to produce more oil," she said.

Maintenance shutdowns at aging offshore platforms will continue to damp output in the first half of 2013, although five new platforms will come on stream through the end of the year, the executive said. The new platforms set the stage for significant output increases in 2014 that should help improve Petrobras's finances, which have become stretched by the company's inability to raise gasoline and diesel prices enough due to government constraints. Petrobras has been losing money on its sales of imported fuel into the domestic market. Last month, the government, which fears higher fuel prices will stoke inflation, only granted the company a limited price increase. "We are always seeking a convergence between domestic and international prices," Ms. Foster said.

Dow Jones Newswires

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