Petrobras to make $174.4-billion oil invstments by 2013

24 January 2009

Petrobras, the Brazilian international energy company, yesterday announced an aggressive business plan of raising its five-year investment plan by an astounding 55 per cent from $112.4 billion announced a year ago for the 2008-2012 period to the now revised $174.4 billion for 2009-2013 period and investing $28.6 billion in the current year itself.

This represents an annual average of $34.9 billion, 90 per cent or $ 157.3 billion of which will be invested in Brazil and 10 per cent or $16.8 billion abroad.

This massive hike in investment comes at a time when oil companies around the world are cutting jobs and cutting costs since the price of crude fell 68 per cent from the dizzy heights of $147 a barrel from July 2008 and is currently trading at approximately $42 a barrel.

The oil major said, ''This business plan is based on the fundamental strategies of the strategic plan 2020. The plan has been revised and updated to take into account the changes in the international macroeconomic scenario and its impacts on oil and oil products market.''

Petrobas expects to generate $120 billion in cash from its operations, at an average price of crude at $47 a barrel. The rest will be funded by debt.

Despite the current financial crises, the figures were based on potential impact in the short-term on oil demand, since in the long term the supply of oil is expected to be even lower than the projected emand due to the depletion in the existing production fields.