As reported by The Oil and Gas Journal (12/3/07) a Brazil court stopped payment by Petrobras for two offshore oil platforms in June, 2007, because the prices being charged for the equipment were far in excess of the proper amount.  In July, police arrested three top PBR officials along with directors of three shipyards relating to bid rigging for the repair of offshore platforms.  The company reported in November that it was having problems increasing production in existing offshore fields and production fell below its stated goals for the January - September period.

Petrobras may be able to put this sort of problem behind them.   The company’s general operating reputation is fairly positive.  However, investors must remember that the Brazilian government does ultimately control PBR, which leaves open the possibility of further  management  issues.   This is a red flag, but not a disqualification for a spot in the portfolio.  The upside of PBR’s enormous Tupi oil field find is still the most significant factor affecting the company’s outlook.

Tags: energy investments

This entry was posted on Monday, December 3rd, 2007 at 6:37 pm and is filed under Brazil, PetroBras (PBR). You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.