The board of Petroleo Brasileiro SA, the world’s most indebted publicly traded oil company, agreed to approve a new mechanism to adjust fuel prices, a board member said.
“It’s only the details that are being discussed now,” board member Sergio Quintella told reporters in Rio de Janeiro today. The oil producer known as Petrobras said Oct. 25 that it presented a fuel price model to the board and will present a revised model on Nov. 22.
“There are a lot of variables included in the model,” Quintella said, when asked if production would be included. He declined to elaborate.
Petrobras said Oct. 25 that net income dropped 40 percent to 3.39 billion reais ($1.55 billion) in the third quarter from a year earlier on higher fuel imports and refining losses. Fuel prices are capped by the government as anti-inflationary measures and prevent Petrobras from adjusting them in line with global prices. While Petrobras exports crude, it imports gasoline and diesel.
Fuel imports climbed to 493,000 barrels a day in the third quarter, an increase of 89 percent from the prior quarter, the company said in the report.
Under the proposal, fuel prices would be automatically adjusted without requiring board approval, as now is required, Petrobras Chief Financial Officer Almir Barbassa told reporters yesterday. The government holds the majority stake in Petrobras. Finance Minister Guido Mantega is chairman of the Rio de Janeiro-based company.
Petrobras has increased prices for gasoline 15 percent and diesel 22 percent since June 2012 to reduce the discount with international prices. The gap narrowed to about 10 percent in the fourth quarter after Brazil’s currency rebounded and international crude prices fell, making imported gasoline cheaper, according to Banco Bradesco SA estimates.
The real weakened to the lowest level in more than four years in August, prompting the the central bank to announce a $60 billion program of currency swaps and credit line auctions.
Since Aug. 22 Brazil’s real appreciated more than all currencies tracked by Bloomberg and reached 2.1523 per dollar on Oct. 17, the highest level since June 14.