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Petrobras' $25 Bln Share Sale is on Track for September, Minister Says

Petroleo Brasileiro SA’s planned $25 billion share sale and swap of stock for oil will go ahead in September and won’t be derailed by presidential elections the following month, Energy Minister Marcio Zimmermann said.

“Brazil can’t stop because of elections,” Zimmermann said today in an interview in Brasilia. “This is not a joke.”

Petrobras postponed the sale planned for this month as it awaits a decision from the oil regulator on how much it will need to pay to tap 5 billion barrels of government-owned oil. The crude will be exchanged for new stock in Petrobras. The delay raised investor concern the company would fail to complete the sale this year amid October polls to elect a successor to Brazilian President Luiz Inacio Lula da Silva.

“The election is the cut-off point,” Anisa Redman, an oil analyst at HSBC Holdings Plc in London, said in a telephone interview on June 22. “After that, it will be more difficult.”

Petrobras plans to sign an agreement to swap new shares for rights to tap government-owned reserves by the end of August and transfer the stock by the end of September.

“It’ll be a rush, but it’s doable,” said Zimmermann, who turned 54 today. “Infrastructure investments are done in a long term. You must meet deadlines to avoid bottlenecks.”

The swap and public offering are part of plans to fund $224 billion of investment through 2014 to develop reserves including Tupi, the largest discovery in the Americas since Mexico’s Cantarell in 1976.

Reserves Price

Brazil may sell the oil reserves to Petrobras at between $5 and $10 per barrel, Zimmermann said.

Crude oil fell to a three-week low today on concern growth in the U.S. and China will slow, curbing demand in the two largest energy-consuming countries. Oil for August delivery declined $2.68 to $72.95 a barrel on the New York Mercantile Exchange, the lowest settlement price since June 8. Futures are down 8.1 percent this year.

Petrobras shares slid 1.5 percent in Sao Paulo trading to 27.45 reais, the lowest closing price since March 9, 2009. It has slumped 9.1 percent since the company announced the delay on June 22.

To contact the reporter on this story: Maria Luiza Rabello in Brasilia at mrabello@bloomberg.net Katia Cortes in Brasilia at at kcortes@bloomberg.net

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