UPDATE 2-Brazil's fuel self-sufficiency hinges on price hikes -Petrobras

miércoles 26 de febrero de 2014 17:17 GYT

By Jeb Blount and Walter Brandimarte

RIO DE JANEIRO Feb 26 (Reuters) - Brazil could become self-sufficient in gasoline, diesel and other fuels by 2020 if state-run oil company Petrobras is allowed to bring domestic fuel prices in line with world prices that will help fund new refineries, company executives said on Wednesday.

Petroleo Brasileiro, as the company is formally known, expects refining capacity to rise 50 percent to 3 million barrels per day (bpd) by 2020 and nearly a third more to 3.9 million bpd by 2030, helping eliminate a growing dependence on U.S. and Indian refineries, according to planning documents released late Tuesday.

Current Petrobras refining capacity is about 2 million bpd and insufficient to meet rising domestic demand, a situation that has forced it to boost imports. Government fuel-price controls, aimed at controlling inflation, have forced Petrobras to subsidize domestic consumers.

With every barrel imported being sold at home at a loss, Petrobras' refining division has been hit with 37 billion reais ($15.7 billion) of losses in the last two years.

Petrobras cut its refining unit budget under the company's overall $221 five-year, 2014-2018 investment program. The $38.7 billion allocated, 40 percent less than in the 2013-2017 plan, must pay to complete two refineries under construction and begin building of two low-sulfur diesel refineries.

But as subsidies drain cash, Petrobras' debt has soared. Without fuel price "convergence," raising the money needed to finance refining and other plans will be difficult, Chief Executive Maria das Graças Foster said on Wednesday.

"We can't improve our investment situation without a convergence in fuel prices," she told investors and reporters during four hours of conference calls in Rio de Janeiro.   Continuación...