- `Everyone knows' Petrobras needs capital at some point
- Maua's Figueiredo says could be done by development bank BNDES
Brazil’s state-run oil producer Petrobras needs a capital injection of as much as 100 billion reais ($25.5 billion) to balance its finances, even if it takes three years to complete, said Luiz Fernando Figueiredo a former central bank director and Chief Executive Officer of Maua Capital.
“Everyone knows that Petrobras needs to be capitalized at some moment, and every day that passes this gets more expensive,” Figueiredo said Tuesday at an event in Sao Paulo organized by Bloomberg and the capital markets association known as Anbima. “It needs a capitalization soon, even if it is a plan for the next one, two or three years.”
The injection could be done by development bank BNDES, which is already a shareholder, he said. While Rio de Janeiro-based Petrobras is making efforts to cut costs amid the low oil price environment that has made many of its projects uneconomical, this hasn’t been enough to lower its enormous debt load and reduce leverage, Figueiredo said.
Petroleo Brasileiro SA saw its leverage explode during the commodities boom when it borrowed heavily to expand oil production into deeper waters of the Atlantic Ocean and build refinery projects that went over budget. It then became the focus of Brazil’s biggest corruption scandal known as Carwash. The company’s refining division also lost tens of billions of dollars during the commodities boom because it was subsidizing fuel imports as part of a wider government effort to curb inflation.
Petrobras and BNDES didn’t immediately respond to a request for comment on the possibility of a capitalization. In January, Brazilian President Dilma Rousseff said her administration would be willing to evaluate financial assistance to the state oil company.