Brazilian oil product demand to carry on rising-Petrobras

Brazil's demand for refined oil products will carry on rising, forcing the nation to increase imports, because Petrobras cannot keep pace even though it is growing faster than

almost any other oil company, its CEO said.
Chief Executive Jose Sergio Gabrielli has already said the state-run company expects to import more than three days worth of gasoline consumption in the second half of 2011 and that the volume could rise in the future.
"We cannot produce more, and demand is continuing to grow. For the next semester (first half of 2012), we are going to import even more," he said.
Gabrielli was speaking at a London roadshow to present the company's $224.7 billion investment plan for 2011-2015, unveiled in Brazil last month.
Many analysts have criticised Petrobras for an overly timid shift towards investment in exploration and production, but Gabrielli defended the integrated oil company model and said that allowed it to cope with the impact of high oil prices on the refinery industry.
Exploration and production should be far more profitable than refining when oil prices are high, but Gabrielli said that over the long term, integrated companies did better in terms of return on capital employed.
He noted that the world's independent refineries had been able to make a profit when oil prices were below $40 a barrel during the market collapse in late 2008.
Brent crude LCOc1 on Monday traded at above $116, but Gabrielli declined to say when Petrobras might decide on an increase in gasoline prices in Brazil.
Higher pump prices could help to curb demand, but the government is worried about the impact they would have on inflation.
Equally, the government is concerned about the strength of the real, which is at its strongest in more than a decade.
CONSERVATIVE PRICE ASSUMPTION
Gabrielli noted that the 2011-15 business plan assumed an average price of 158 Brazilian reais ($101) per barrel when the oil price was $80 and 177 reais when the price was $95 and said the gasoline price was adjusted as the oil price moved.
With oil prices well above the $80-$95 range, the retail gasoline price was on average 2.35 reais per litre in July, according to the national oil and gas agency, or 373.65 reais per barrel (159 litres).
For Petrobras, current breakeven costs on its deepwater offshore crude region known as the subsalt are at $45 per barrel and should fall.
"It's going to be even better in the future because we can increase production," and the increase would generate economies of scale, Gabrielli said.
Petrobras' investment plan, the oil industry's largest, aims to tap some of the world's greatest deep-sea oil deposits and more than double production by the end of the decade to 6.42 million barrels per day.
Asked when Petrobras was going to be the biggest oil company in the world, Gabrielli said it depended on the other companies but said it was growing faster than the giants of the industry.
"We are growing faster than Exxonmobil . We are growing faster than Total , than Shell, Saudi Aramco , Gazprom , ENI ... you name it," he said.
The 2011-2015 business plan also includes divesting less profitable assets, although Gabrielli would not provide details.
Asked whether Petrobras would sell its Pasadena refinery in Texas, for instance, he said: "I don't know."
Source: Reuters