plans to acquire refineries that may make the company the world's third-largest seller of gasoline and diesel.
Board members will meet May 12 to discuss buying a Valero Energy Corp. plant in Aruba that would boost refining capacity by 14 percent, Chief Executive Officer Jose Sergio Gabrielli said. Petrobras, as the Rio de Janeiro-based company is known, will look for more purchases, he said.
Petrobras wants to focus on selling refined products rather than crude to generate more profit from offshore discoveries including Tupi, the Western Hemisphere's biggest oil find since 1976, Gabrielli said in a May 5 interview in Houston. Exxon Mobil Corp. and Royal Dutch Shell Plc, the biggest oil companies, get more than 20 percent of their net income from refining.
``It makes good sense that they want to add some value to their production chain,'' James Bartis, an oil analyst at Rand Corp. in Arlington, Virginia, said of the Brazilian company.
Petrobras is focusing its acquisition search on Asia, where fuel demand is growing 10 times faster than in the U.S. and plants command lower prices than in North America and Europe, Gabrielli said.
``The problem in the U.S. right now is you are going to pay a present value that's too expensive,'' Gabrielli said. ``We are in the process of analyzing possibilities'' in Asia.
Shares Gain
Petrobras has jumped 30 percent since the Tupi discovery was announced in November. The Standard & Poor's index of major U.S. oil producers has risen 6.9 percent over the same period. In trading today, Petrobras climbed 1.1 percent to 45.50 reais in Sao Paulo.
Preferred shares of Petrobras were rated ``overweight'' in new coverage by analysts at Lehman Brothers Holdings Inc., who cited high expectations for production growth.
Petrobras said this week that it will start pumping oil from Tupi, located 250 kilometers (155 miles) off the Brazilian coast, in next year's first quarter, a year ahead of schedule. The field, which may hold 8 billion barrels of recoverable oil, is one of seven or eight prospects in the same area of the Atlantic, according to the company.
The offshore fields underpin Gabrielli's plan to increase output 79 percent by 2015 to the equivalent of 4.2 million barrels of oil. If the company maintains its current proportion of crude and natural-gas production, it will have about 3.5 million barrels of oil a day to refine.
Exxon Mobil, Shell
Irving, Texas-based Exxon Mobil, the world's largest refiner, can process 5.6 million barrels of crude a day. Shell's capacity is 3.8 million barrels, according to data compiled by Bloomberg.
Petrobras owns stakes in 18 refineries that process about 2 million barrels of oil a day, or 85 percent of current output, said Lilyanna Yang, an analyst at JPMorgan Chase & Co. in New York.
Valero's Aruba plant can process 275,000 barrels of oil a day and includes two delayed coking units, which handle heavy crude similar to the grades in Brazil's offshore deposits.
``We will discuss it,'' Gabrielli said of the board meeting. ``We are not committed to making a decision.''
Gabrielli, 59, is one of the eight Petrobras directors. San Antonio-based Valero acquired the Aruba plant four years ago for $627 million.
`Predictable Cash Flows'
Petrobras already refines more of its crude than other state-controlled oil companies, such as Russia's Rosneft Oil Co. and Beijing-based PetroChina Co., Yang said in a May 5 note to clients.
The company's ability to refine crude ``implies more stable and predictable cash flows so as to better finance sustainable long-term growth,'' Yang said.
Petrobras is in talks with its partner in a Pasadena, Texas, refinery, Astra Oil Co., to double processing capacity from 106,500 barrels a day, said Alberto Guimaraes, president of the Brazilian company's U.S. unit.
Petrobras expects its share of the expansion to cost $1.4 billion, or almost 30 percent of the U.S. unit's five-year capital budget, Guimaraes said. The rest will go for developing oil discoveries in the Gulf of Mexico.
Last month, the company paid $50 million for Exxon Mobil's 87.5 percent stake in a 100,000 barrel-a-day refinery in Okinawa, Japan, its first entry into the Asian fuel market. The price was equivalent to $571 per barrel of refining capacity, compared with the $5,094 per barrel that Alon USA Energy Inc. agreed to pay yesterday in a $433 million purchase of Valero's plant in Krotz Springs, Louisiana.
Refinery prices are lower in Asia because many of the plants are configured to process light, low-sulfur crude, rather than cheaper, heavier grades of oil, Gabrielli said. Most large U.S. plants already have been converted to handle lower-grade crude, which generates bigger profit margins, he said. |
