Of the total of Petrobras investments in 2008, 11.5% were allocated to international activities, focusing on the increase in the activities of refining and distribution
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- Performance in 2008
Positive RESULTS IN FACE OF GLOBAL ECONOMIC INSTABILITY
In the second half of 2008, the changes in the international economic scene caused global effects, such as instabilities in the quotations of the barrel of oil, stock exchange volatility, limited access to the credit market and ensuing increased costs of new operations.
In spite of this conjuncture, Petrobras had positive results in its operational, economic and financial performance in the year. The net profit of the company achieved a record of R$ 33 billion, calculated from the changes in Brazilian accounting practices (Law 11.63 8/07, on the preparation and disclosure of financial statements for large companies). The profit, 53% higher than in 2007, was mainly due to the increase in total production and average prices of petroleum and byproducts, a larger sales volume, besides gains relating to changes in the exchange rate.
With a growth of 26% in relation to 2007, the net operating revenue was R$ 215.1 billion, whereas the operating cash flow (EBITDA) was R$ 57.2 billion, an increase of 14%.
The company investments also had a record volume, totaling R$ 53.3 billion, 18% more than in 2007. The area of exploration and production received R$ 26.2 billion (49.1% of the total), which contributed to the replacement of reserves and the knowledge of reservoirs in the pre-salt layer (in ultra-deep water off the Brazilian coast). Downstream investments were R$ 12 billion (22.5%), emphasizing the increased capacity of refining, compliance with standards of quality and construction of the Petrochemical Complex of Rio de Janeiro (Comperj).
The other investments were allocated to the areas of gas & energy (13.5%), international (11.5%), corporate (2.3%) and distribution (1%).
The company’s refineries were responsible for the total production of 1.97 million barrels of byproducts per day, using 91% of installed capacity in Brazil and 61% of the capacity elsewhere
With the downward trend in the main world stock exchanges, Petrobras papers (shares and receipts) accompanied the negative performance of BOVESPA and the Dow Jones Index. The market value was R$ 224 billion, a drop of 52.1% compared with 2007.
In line with the principles of capital discipline, the company took strict measures to control its costs. This factor contributed to maintaining its goals of growth, with a well-structured portfolio of projects with a high return.
Another operational highlight was Petrobras production, which attained the mark of 2.4 million barrels of oil equivalent per day (boed) of oil and natural gas, an increase of 4.3% compared with the previous year. Also 1,979 million barrels of oil, liquefied natural gas (LNG) and condensate and 421,000 boed of natural gas were produced. The opera-tions in Brazil handle 90.7% of the total production, with 2,176 million boed. The start of production in the pre-salt layer in Campos Basin and natural gas production in Brazil (17.8% more than in 2007) were highlights in 2008.
According to the criteria of the Society of Petroleum Engineers (SPE), the volume of proven reserves of oil, condensate and natural gas of Petrobras, on December 31, 2008, was 15.08 billion barrels of oil equivalent (boe), 93% in Brazil.
The refineries of the company were responsible for the total production of 1.97 million barrels of byproducts per day, using 91% of the installed capacity in Brazil and 61% of the capacity in other countries. The 3.7% drop in byproduct production compared with 2007 is mainly due to the sale of refineries in Bolivia and scheduled shutdowns in Argentina and in the USA.
The total sales of the company came to 3.37 million boed, including exports, natural gas and international sales, representing an increase of 4.2% compared with the previous year. In Brazil, where the growth was 5.5%, the main products in sales volume were diesel (34%), gasoline (15%), natural gas (15%) and liquefied petroleum gas (LPG) (10%).
RELEVANT FACTS
> In April, the creation of an executive management responsible for coordinating the activities of exploration and production in the pre-salt layer was approved.
> In June, the subsidiary Petrobras Biocombustível S.A. was created, to develop the sale of ethanol and biodiesel production to consolidate Petrobras in the segment. In 2009, the company will now operate three commercial Petrobras biodiesel production plants, under the concession of the National Agency of Petroleum, Natural Gas and Biofuels (ANP ). Two of these plants were launched in 2008 one planned to start production in January 2009.
> With works started march, in the Petrochemical Complex in Rio de Janeiro (Comperj) will produce 150,000 barrels of petroleum per day for the production of petrochemical byproducts from 2012 onwards. The complex will be composed of a basic petrochemical utility center, second generation units, corporate and worker capacity-building center plus a distribution center for liquid products.
> With operations foreseen to start in 2011, the Abreu e Lima S.A. refinery was constituted in March 2008 as a closed capital joint-stock company. The unit has investments of US $ 4.05 billion and will have capacity to process 230,000 barrels of petroleum per day and produces low sulfur content byproducts.
> In May, Petrobras Holding and its subsidiary Petroquisa increased their participation in Braskem, a Brazilian petrochemical company, to hold 30% of the voting capital. And in December the Administrative Council for Economic Defense (Cade) approved the acquisition by Petrobras of the assets of the Ipiranga group, related to the business of distribution and resale of fuels and lubricants and greases in the North, Northeast and Central West regions of Brazil, besides the production and distribution of asphalts in the country.
> Petrobras also concluded the operation of acquiring the total share issue of Termobahia S.A., in April. In July, Petrobras Distribuidora transferred its shares in energy companies to Petrobras Holding, when the general energy management was created.
> Some of the new undertakings will include building two premium refineries for high quality and low sulfur content byproducts from processing heavy oil and acid, both in Northeast Brazil.
> After being approved in an Extraordinary Shareholders Meeting, the proposal to split Petrobras shares was put into effect in April. The result was that each common and preferential share was now represented by two shares. The capital stock of the company was now 8,774,076,740 shares with no face value.
> At the beginning of the year, equipment containing information considered important for the company was stolen from the premises of a firm providing special services to Petrobras. The actions of Federal the Police and the Brazilian Intelligence Agency (Abin) led to the prison for those involved and recovery of the material.
INTERNATIONAL ACTIVITIES
Petrobras, by means of units, subsidiaries or offices of commercial and financial representation, performs in 28 countries, including Brazil. The company has activities of exploration and production in 20 countries; of refining in four; of distribution in six; of petrochemicals and electricity in two; and offices of representation in four. The international Petrobras Subsidiary Braspetro B.V. (PIB BV) participates in companies which perform outside brazil in several segments of the oil and gas industry.
For the period 2009 thru 2013, it is foreseen to invest US$ 15.9 billion in international operations, of which 79% will be related to exploration and production.
Click to access Petrobras International Activities
PRESENCE IN THE FOREIGN MARKET
In 2008, 11.5% of all Petrobras investments that year was allocated to international operations (performance outside Brazil), focusing on increasing refining and distribution. Some of the highlights were the signing of the purchase agreement of participation of ExxonMobil in Esso Chile Petrolera, increasing the company’s share in the fuel distribution segment in Latin America, and the conclusion of the purchase of 87.5% of the shares in the Japanese refinery Nansei Sekiyu, in Okinawa. With capacity to process 100,000 barrels of oil a day (bpd) and store 9.6 million barrels of byproducts, the refinery provides logistic support for the distribution of the company products in the Asian market.
As a strategy of expansion in the Gulf of Mexico, USA, Petrobras bought at an auction 23 new exploratory blocks, coming to have a participation in 259 offshore blocks (operating 161 of them). The company also has onshore exploratory rights in the country, in Texas.
In Ecuador, Petrobras and the government of the country signed an agreement which extends for a year the negotiation about the concession contracts of the unified field of Palo Azul and block 18, in which Petrobras has a share. A new draft contract will be presented by the government of Ecuador. Block 31 was returned to the State, as agreed, due to the difficulty of developing it.
Some risks associated with the common impacts of oil and gas operations are considered in the international performance of Petrobras, such as market risks (prices, interest rates and exchange rate, drop in consumer levels), political and regulating risks and business risks (production, reserves and competition). In acquisitions or operating start-up in certain countries, there are also risks of rejection by part of the surrounding community and direct customers, by the nature of the activity or by the fact that the company is based in another country.
However, among the opportunities identified for the international activities, it is worth mentioning the increase in company business, greater visibility of the Petrobras brand, the transmission of best practices to investors and other stakeholders, as well as the development of new forms of energy, such as biofuels.
PETROBRAS IN NUMBERS
| Net equity (in thousand R$) | |
|---|---|
| Capital stock executed | 78.966.691 |
| Capital reserves | 514.857 |
| Revaluation reserves | 10.284 |
| Profit reserves | 58.643.049 |
| Accrued conversion adjustments | 636.264 |
| Equity evaluation adjustments | (405.863)(2) |
| Total | 138.365.282(1) |
- 1) consolidated as per financial statements on December 31, 2008.
- 2) amounts between parentheses are negative.
In 2008, there was no use, as in previous years, of resources from Addition to Freight for Renewal of the Merchant Navy (AFRMM), a financial incentive from the Brazilian government.
| Assets (in thousand R$) | ||
|---|---|---|
| Current(2) | 63.575.278 | |
| Non-current (long term) | 21.254.843 | |
| Non-current (investments) | 5.106.495 | |
| Non-current (real estate) | 190.754.167 | |
| Non-current (intangible) | 8.003.213 | |
| Non-current (deferred) | 3.469.846 | |
| Total | 292.163.842 (1) | |
- 1) consolidated as per financial statements on December 31, 2008.
- Current assets include: cash and cash equivalents; bonds and securities; net accounts receivable; dividends to receive; inventories; taxes, contributions and participations; prepaid expenses; other currents assets.
| Added Value Financial Statement Fiscal year ending in December 2008 and 2007 (in thousand R$) | ||
|---|---|---|
| 2008 | 2007 | |
| Revenue | 315.933.330 | 246.107.023 |
| Sales of goods, products and services | 268.936.483 | 220.153.532 |
| Revenue referring to building own assets | 47.163.873 | 26.057.647 |
| Provision for credits of doubtful settlement – constitution | (167.026) | (104.156) |
| Production resources acquired from third parties | (166.732.054) | (110.292.287) |
| Cost of products, goods and services sold | (53.989.794) | (29.888.395) |
| Materials, energy, services of third parties and others | (52.590.649) | (42.890.479) |
| Loss/recovery of active amounts | (2.658.224) | (480.812) |
| Others | (57.493.387) | (37.082.601) |
| Gross added value | 149.201.276 | 135.814.736 |
| Withh olding (depreciation and amortization) | (11.631.984) | (10.695.826) |
| Net added value produced by the company | 137.569.292 | 125.118.910 |
| Added value received in transfer | 3.914.124 | 2.514.692 |
| Income of equity accounting | (115.790) | (367.361) |
| Financial revenue | 3.494.430 | 2.417.659 |
| Others | 535.484 | 464.394 |
| Add ed value to distribute | 141.483.416 | 127.633.602 |
| Distribution of add ed value | 141.483.416 | 127.633.602 |
| Staff | 14.526.830 | 14.163.085 |
| Direct remuneration | 10.448.120 | 8.052.873 |
| Benefits | 3.478.036 | 5.603.033 |
| FGTS | 600.674 | 507.179 |
| Taxes, charges and contributions | 85.112.615 | 73.919.111 |
| Federal | 62.625.920 | 50.810.506 |
| State | 22.338.990 | 22.993.351 |
| Municipal | 147.705 | 115.254 |
| Remuneration of th ird party capital | 10.945.676 | 16.296.791 |
| Interest | 1.891.069 | 7.385.853 |
| Rent | 9.054.607 | 8.910.938 |
| Remuneration of own capital | 30.898.295 | 23.254.615 |
| Interest on own capital and dividends | 9.914.706 | 6.580.557 |
| Interest withheld/loss of fiscal year | 23.073.086 | 14.931.232 |
| Non-controlling participation in withheld profit | (2.089.497) | 1.742.826 |
- 1) The added value to distribute equals the revenue minus the production resources acquired from third parties and withholding (depreciation and amortization) plus the added value received in transfer.
- 2) The added value is distributed between government (60%), shareholders (22%), staff (10% and third parties (8%).
- 3) The amounts of 2007 differ from those published in the USA 2007, the result of changes in Brazilian accounting practices (Law 11.638/07).
- 4) A mounts between parentheses are negative.