Petrobras’ RTM results in revenue shortfalls

Brazil’s Petrobras will need to raise its debt load by USD 20.6 billion by the end of the year to cover gaping revenue shortfalls, according to the latest BNamericas intelligence series report. The document says the federal energy major’s revised USD 237 billion five-year business plan announced last month would “stretch its budget to the limit.”

“Financing for Petrobras’ investment plan relies heavily on internal generated cash flow and oil prices above USD 85 billion,” the report said.

While Petrobras’ exploration and production unit has been able to improve its bottom line, the same cannot be said for the Refineries, Transport and Marketing (RTM) unit, which suffers from insufficient production and high international prices.

“We expect Petrobras to continue to rely on debt offerings to cover any financing shortfalls created by stagnant cash flow generation that is insufficient to cover investments.”

According to Centro Brasileiro de Infraestrutura (CBIE), Petrobras spent USD 958 million on foreign oil shipments in the first quarter, a 7.72% increase on the same period last year. The company’s CEO Maria das Graças Foster said the Comperj petrochemical complex in Rio de Janeiro state and two refineries in Brazil’s northeast had been postponed indefinitely.

Petrobras’ net debt rose to USD 58.2 billion at the end of the first quarter from USD 53.7 billion at the same time last year, according the company’s Q1 report.Despite the balance sheet concerns, the report said Petrobras’ improved oil and gas production results could “fuel higher sales revenues.”

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