About the only factor that has disturbed me about PetroBras, which I own, is the potential conflict between the interests of shareholders and those of state of Brazil.  Here is news that Pres. Lula is urging management to side with the country in just such a conflict.   The issue is how PBR will obtain the massive number of new deep sea rigs it will need to expoit its new offshore discoveries.  I must say, this is a nice problem for a company to have.

Here is the full article from Reuters:

Lula urges Brazil oil rig output despite costs

Mon Apr 7, 2008 10:03am EDT

RIO DE JANEIRO, April 7 (Reuters) - President Luiz Inacio Lula da Silva backed on Monday national production of oil platforms to create jobs in Brazil even if it will cost state-run oil company Petrobras more than to lease them abroad.

"It is true that if you contract a platform abroad you can save maybe $50 million or $100 million, if you are thinking just in the company. But let’s think about Brazil," Lula said in his weekly radio program Breakfast with the President.

"Petrobras, although it has private capital, is a company run by the government. And this company has to think not only in the growth of its profitability, but about the wealth it can produce for Brazil," Lula said.

Lula also said Brazil’s shipping freight costs amounted to $8 billion a year, weighing on the trade surplus and called to rebuild the country’s shipbuilding industry, which has been in decline since the 1970s.

He said he firmly believed the country would in the next few years become an important world reference in terms of shipbuilding and oil platform production.

Petrobras (PETR4.SA: Quote, Profile, Research)(PBR.N: Quote, Profile, Research) is a publicly traded company, but the government holds a controlling stake.

The government’s de facto control over Petrobras’s fuel pricing policies has weighed on the company’s share price in the past few years even as world oil prices rallied.

Petrobras said last week it would build a dry dock for mass production of standardized oil platform hulls in southern Brazil, which its Chief Executive Jose Sergio Gabrielli said would help to reduce costs.

It is preparing to develop the giant Tupi field, where it will need various platforms.

The state-run company has made big oil and gas finds in the subsalt cluster deep under the ocean floor. The Tupi field with estimated recoverable reserves of up to 8 billion barrels may be the world’s largest deepwater discovery, but analysts have warned production costs may be way above average. (Reporting by Andrei Khalip; Editing by John Picinich)

Tags: energy investments

This entry was posted on Thursday, April 10th, 2008 at 8:33 pm and is filed under Brazil, PetroBras (PBR), Transocean (RIG). 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.