Canada Markets open in 5 hrs 26 mins

Petrobras denies strategy change after Bolsonaro blasts profits, fuel prices

  • Oops!
    Something went wrong.
    Please try again later.
·2 min read
FILE PHOTO: The logo of Brazil's state-run Petrobras oil company is seen at its headquarters in Rio de Janeiro
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

By Gram Slattery and Roberto Samora

RIO DE JANEIRO (Reuters) -Executives at Brazil's state-controlled oil company Petrobras on Friday shrugged off President Jair Bolsonaro's suggestion that it was too profitable and should lower fuel prices, and insisted they had no plans offer subsidies at the pump.

Claudio Mastella, the company's logistics chief, said on a call to discuss third-quarter earnings that the firm continues to price its fuel in line with the international market and has no plans to change its pricing policy.

If prices were frozen, there would likely be fuel shortages in Brazil, Mastella added during a subsequent press conference, pointing to private importers who could drop out of the market.

Chief Executive Joaquim Silva e Luna said that Petrobras does not pursue "profit for profit's sake," but does so to give back to society in the form of taxes, investments and dividends, including to the federal government, its majority shareholder.

Luna highlighted 23.3 billion reais ($4.14 billion) worth of dividends Petrobras will pay the government based on earnings this year, while Chief Financial Officer Rodrigo Araujo suggested there could be more coming.

"For 2021, we could eventually announce another distribution" of dividends, Araujo said, reaffirming for next year a policy of paying dividends worth 60% of free cash flow.

The comments came the day after Bolsonaro said Petroleo Brasileiro SA, as the company is formally known, was too profitable and that he would seek a way to change how it sets fuel prices domestically.

The company's policy of seeking parity between domestic fuel prices and international markets has angered many Brazilians as the cost of Brent crude has soared . A growing chorus of politicians has said Petrobras should help shoulder the burden.

Shortly after Bolsonaro's comments on social media on Thursday night, Petrobras posted a third quarter profit of 31.18 billion reais, smashing analysts' estimates.

Later on Thursday evening, Senate President Rodrigo Pacheco said he would schedule a meeting with the company's executive board to see how the firm could keep fuel prices down.

Analysts at Bradesco BBI applauded the comments from Petrobras executives, but flagged downward pressure on the company's shares due to noise around fuel pricing, including a Nov. 1 trucker strike to protest diesel prices.

Brazil-listed preferred shares in Petrobras were off 5.5% in afternoon trade, while the benchmark Bovespa equities index fell 1.5%.

($1 = 5.63 reais)

(Reporting by Gram Slattery in Rio de Janeiro and Roberto Samora in Sao PauloEditing by Marguerita Choy and Edward Tobin)

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting