(Adds Petrobras comment, details from conference call, share movement)
By Jeb Blount
RIO DE JANEIRO, May 12 (Reuters) - Brazil’s state-run oil company, Petroleo Brasileiro SA, will start operations at its Abreu e Lima refinery in November, Chief Executive Maria das Gracas Foster said in a teleconference on Monday.
Petrobras, as the company is known, expects the refinery, also known as Refinaria do Nordeste (RNEST), to start running at half capacity, refining 115,000 barrels per day (bpd). Full refining will not start until mid-2015, when a second 115,000-bpd train is ready to start at the refinery, near Recife.
Another new Petrobras refinery, Comperj, in Rio de Janeiro, is expected to start its first production train in August 2016, Foster said during the conference call to discuss first-quarter results. On Friday the company said profit fell 30 percent in the quarter from a year earlier as costs rose and production stagnated.
Petrobras is hoping the RNEST and Comperj refineries will help cut refining-unit losses by reducing the need for fuel imports. Brazil’s refineries have been unable to keep up with rising demand and domestic fuel-price controls have meant that imports to close the gap are sold in Brazil at a loss.
Petrobras has struggled to implement a $221 billion five-year investment plan as the fuel price controls and stagnant output starve the company of cash. Rio de Janeiro-based Petrobras now has the highest debt levels and lowest profitability of any major oil company.
Petrobras is looking at a possible joint venture with China’s Sinopec for a refinery in Brazil’s Maranhao state, and should have an answer concerning Chinese participation by the end of the year, Jose Cosenza, Petrobras’ head of refining and supply said on the conference call.
Despite the troubles, Foster said there is “almost zero” chance of reducing Petrobras’ investments this year and next.
“In 2014 and 2015, the chance of reducing investment is very low,” she said. “We are confident that with the reduction of costs we can produce more with less.”
Even with debt levels rising, Foster said she was confident that the company will not lose its investment-grade credit rating, after speaking directly to the credit ratings agencies
Petrobras’ financial difficulties come as the company’s role in a growing Brazilian political scandal threatens to catch up with President Dilma Rousseff as she runs for re-election in October.
Opposition politicians have seized on alleged cost overruns at Brazilian and U.S. refineries, and on allegations of bribery involving Dutch company SBM Offshore and its leasing of oil-production ships to Petrobras, to attack Rousseff’s record as an administrator. Rousseff is a former chairwoman of Petrobras.
Foster said an internal report on the SBM case has been delivered to Brazil’s government and to prosecutors. In February, allegations from a former SBM employee came to light suggesting SBM paid $250 million in bribes, with $139 million of that paid in Brazil.
Petrobras preferred shares, the company’s most-traded class of stock rose 1.6 percent to 17.95 reais in afternoon trading on Monday. (Reporting by Jeb Blount; Writing by Silvio Cascione; Editing by Peter Galloway)