Brazil’s government wants to privatize Petrobras by the end of its term, in 2022, Reuters reports, citing information from unnamed sources carried by Brazilian media.
That’s despite President Bolsonaro’s initial opposition to the privatization of the energy giant when its new chief executive Roberto Castello Branco suggested a full privatization. After he was picked to lead the oil firm, Castello Branco ruled out a Petrobras privatization, but still wants to sell non-core assets of the company to reduce its massive net debt of US$72.888 billion as of the end of the third quarter of 2018.
“There are big guys thinking they won’t be privatized, but we will get there,” Economy Minister Paulo Guedes said in a recent speech, as well. The new Brazilian government has ambitious privatization plans. In January, the secretary of privatization, Salim Mattar, said that Petrobras should sell most of its 36 subsidiaries as part of the government’s plan to generate US$20 billion from state companies’ asset sales this year.
The energy major earlier this month reported its highest quarterly net profit in its history helped by asset sale proceeds. At almost US$5 billion (18.87 billion reias), the net result was substantially higher than the analyst consensus, which stood at US$2.1 billion (8.06 billion reias). Stripped of the one-off effect of the asset sales, however, the net result would have been lower than analyst expectations, suggesting Petrobras is still vulnerable to all the uncertainties of its industry.
CEO Castello Branco said as much at the presentation of the results, as he noted most of the company’s performance had been the result of factors outside Petrobras’ control. What is within its control are spending plans and these are now more upbeat than before. By 2023, Petrobras plans to spend US$105 billion, which is up from an earlier investment plan of US$84.1 billion. Divestment plans for the period to 2023 were revised upwards as well, to US$35 billion from US$27 billion.
By Irina Slav for Oilprice.com
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