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Petrobras Gains on Speculation Brazil May Allow Price Raises

Aug. 15 (Bloomberg) -- Petroleo Brasileiro SA, Brazil’s state-controlled oil producer, surged the most since April after newspaper Valor Economico said the government is considering allowing the company to increase fuel prices.

The shares rose 5.2 percent to 17.83 reais at the close of trading in Sao Paulo, the most since April 29 and maintaining gains even after the government said there was no plan for fuel-price increases. Trading volume was 2.7 times the three-month average. The benchmark Ibovespa was unchanged.

Brazil is considering allowing Petrobras, as the company is known, to gradually increase gasoline and diesel prices, Valor Economico columnist Claudia Safatle wrote, citing a government official she didn’t identify. The Rio de Janeiro-based producer sells fuel at a discount as the government, which owns a majority of the company’s voting shares, has refrained since March from raising fuel prices as part of an effort to control inflation.

“The shares could be getting a boost from the discussion of price increases in gasoline and diesel,” Luana Helsinger, an analyst at GBM Grupo Bursatil Mexicano in Rio de Janeiro, said by e-mail. “The company is always requesting a return to price parity, which doesn’t necessarily happen.”

Energy Minister Edison Lobao today denied that the government is studying plans to raise energy costs.

Pre-Salt

Petrobras has increased prices for gasoline 15 percent and diesel 22 percent since June 2012 to reduce the discount with international prices. The company plans to eventually bring domestic fuel prices into line with international prices to eliminate the losses, Chief Financial Officer Almir Barbassa said on a conference call on Aug. 12.

Lobao also denied today’s report from Valor that the government is considering plans to lower requirement for Petrobras to hold a minimum 30 percent stake in groups to explore pre-salt fields.

“There is no bigger help for Petrobras than assuring them a stake of the wealth that will be found in the pre-salt,” the minister said.

Being allowed to acquire a smaller stake could be beneficial for the company, according to Helsinger, as the state-run oil producer’s debt reaches record levels.

Petrobras’s ratio of adjusted net debt to operating earnings before interest, taxes, depreciation, amortization and rent climbed to 3.5 times at the end of last year from two times in 2010, according to Fitch Ratings.

To contact the reporter on this story: Julia Leite in New York at jleite3@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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