May 26, 2020
Petrobras intends to dispose of all its participation in the petrochemical company Braskem by operating in the capital market, the president of the state oil company, Roberto Castello Branco, reiterated on Monday, when he projected that the deal could take place until the beginning of next year. .
“We believe it will be feasible until the end of the year, if not, at the beginning of next year, to sell this stake”, said the executive, when participating in a live broadcast of Genial Investimentos.
The path to make the divestment viable is through the migration of Braskem to the Novo Mercado of the B3 stock exchange, with the conversion of all the company’s shares into common shares, which is already the subject of conversations between Petrobras and Odebrecht, a partner in the petrochemical company and holder of 50.1% of the voting shares.
“There is no sense in Petrobras being a partner at Braskem. First, Petrobras is not an investment fund. We do not operate Braskem, we only have a shareholding ”, pointed out Castello, when justifying the divestment.
The oil company has sought in recent years to sell several assets to reduce debts and focus on exploration and production in deep and ultra-deep waters.
Now, in the midst of the impacts of the coronavirus pandemic, which brutally reduced demand for fuels, bringing oil prices down on the international market, Petrobras has also started to conduct a reassessment of its project portfolio.
“We are doing a complete review of the project portfolio, a kind of ‘stress-test’. To see which ones can be executed, others that can be, but will depend on restructuring, and those that will be postponed or even definitively canceled ”, explained Castello.
This work involves an assessment of the risk and return of the necessary projects and investments, so that the company can finance them without leveraging “too much” as in the past, added the executive.
He pointed out, however, that the Búzios field, in the pre-salt, which the company expects to invest billions of dollars in the coming years, should not be affected by these reviews.
“This asset is resistant to very low prices, it is what is called a world-class asset. Large reserves, low risk, extraction cost close to 3 dollars / barrel … and it is the largest offshore oil field ever discovered in the world. This is certainly worth it, my expectation is that it will go through the stress test easily.
The company recorded a historic net loss of 48.5 billion reais in the first quarter, after a large write-off due to a review of the long-term assumptions for Brent oil.
Commenting on possible consequences of the current pandemic of the new coronavirus, the president of Petrobras highlighted that a deep recession due to the disease and the isolation measures adopted to combat it could generate important political changes.
According to him, a movement like this “favors statist political groups”, which defend greater state intervention in the economy.
Castello Branco, a graduate of the University of Chicago, defines himself as a broadly liberal economic thinker, as does the Minister of Economy, Paulo Guedes, who attended the same American school.
“People, in the face of the crisis, want a great father to help them, and then it is important for society not to give in to the temptation of populism,” he said.
The executive’s speech comes at a time when analysts are still concerned about the impacts of the economic crisis on Petrobras’ fuel pricing policies.
On May 13, after President Jair Bolsonaro criticized a 12% increase in gasoline by the state-owned company, analysts at UBS classified the price policy as “the main risk” for the company.
“We have seen similar comments before (from Bolsonaro) and investors know the cost this can cause for the company,” they wrote in a report.
During the live broadcast, the president of Petrobras was not asked about Bolsonaro’s recent speech or pressures on his pricing policy.
But he defended that, before the most recent increases, the company had been reducing the prices in the refineries strongly due to the fall of the oil in the international market, in a movement that was not accompanied by the stations.
“With regard to gas stations, there is nothing that Petrobras can do … it is outside our scope, we are not a regulatory agency. This is the role of Cade (Administrative Council for Economic Defense), Petrobras is just one company, ”he said.
After the cycle of price reductions, Petrobras announced three consecutive readjustments for gasoline, up 38% in May alone. The company also announced the first adjustment of the year for diesel, at 8%.