Petrobras will be competitive on prices, says director – 05/12/2023 – Market

The Director of Logistics, Commercialization and Markets at Petrobras, Cláudio Schlosser, said this Friday (12) that the company’s new strategy for fuel prices foresees increasing its competitiveness in the search for customers in the domestic market.

“When Petrobras represents the best alternative for the client and the client represents the best alternative for Petrobras, we will not lose the sale”, he said, in a teleconference with analysts to detail the profit of R$ 38.1 billion in the first quarter.

The company began re-discussing its pricing policy, which it now prefers to call commercial strategy, after the complete renewal of management with the election of a new management and board of directors at the end of April.

“Petrobras will seek in the execution of its commercial strategy to be increasingly competitive in the Brazilian market. We are going to do this in a very rational way. The main parameter is to preserve the company’s value creation”, stated Schlosser.

The statement confirms the change in direction in relation to the Michel Temer and Jair Bolsonaro governments, when the company allowed the growth of imports of products by third parties by charging prices that simulated the cost of importing products.

This policy, known as PPI (import parity prices), became the target of criticism with the rise in oil prices after the end of the most critical period of the pandemic, which took domestic fuel prices to historic records in 2022.

The state-owned company has not yet detailed how the new commercial strategy will be, but it has been signaling that it will have different prices by market and according to the type of customer – currently, prices are defined by product delivery point (refineries or terminals).

The company’s command, however, has promised that the change will represent lower prices for the Brazilian consumer, considering that part of the fuel production costs is national. Changes in international oil prices, however, will continue to influence domestic prices.

The company also intends to expand the use of its refining capacity, in order to have a greater volume of domestic products. In the first quarter, the refineries’ utilization factor was 85% and the idea is to keep this indicator above 90%.

In the medium term, Petrobras will analyze the expansion of refining capacity with investments in existing units. Internal projections indicate that it is possible to obtain another 450 thousand barrels per day, the equivalent of two refineries such as Duque de Caxias, in Rio de Janeiro, without building a new unit.

“We are already talking with the company’s economic area, because we have to guarantee the rationale for these projects, to be viable. But it is a very large potential that is in our portfolio”, said the Director of Industrial Processes and Products, William França.

In the conference call, further details were not presented on the proposed changes in the policy of dividends and share buybacks. On Thursday (11), still following the policy approved by Bolsonaro, the company announced BRL 24.7 billion in dividends.

The company’s Chief Financial Officer, Sergio Caetano Leite, said this Friday that the reassessment of the dividend policy is still in its initial phase and, once defined, will need to be approved by the board of directors and the board.

“We still don’t have a clear direction on what the path or frequency of payment will be. We are going to propose what makes the most sense not only for cash management but also for shareholders”, he commented.

About the repurchase, he said that it is a strategy adopted by large global oil companies, as a destination of part of the record profits obtained with the rise of oil in recent years.