Petrobras maps plan to transform itself into global energy firm.(Petroleo Brasileiro S.A.)(Statistical Data Included)(Interview)

Petroleo Brasileiro SA has mapped out a battle plan for the next decade that calls for the Brazilian state petroleum company to transform itself into a multinational energy company.

The plan hinges on spending $32.9 billion to increase crude oil and gas production in Brazil significantly by 2005, improve refining-marketing efficiencies, expand domestic gas and power investments, and venture deeper into international exploration and production.

Petrobras Pres. and CEO Henri Philippe Reichstul outlined his company's strategy for the coming decade in an exclusive interview with Oil & Gas Journal.

The strategy's goal is to position Petrobras to better compete with private-sector companies that are scrambling to gain footholds in Brazil's petroleum industry--recently thrown open to competition after the state oil company's 45-year monopoly ended.

Privatization

However Petrobras positions itself to meet the new competition head on, it will still be as a largely state-owned firm, company officials say.

Reichstul insists that there are no plans to fully privatize Petrobras. However, he also says there has been no change in the government's plan to sell a 34% stake in the company's voting stock to build on the 14.77% share now held by the private sector.

Sale of a 34% stake would still leave the Brazilian federal government with a controlling stake of 50% plus 1 share. According to Reichstul, Petrobras will not undertake a strategic sale of the stock in order to enter into a partnership, but will sell it on the open market.

Even if ownership of Petrobras remains in the control of government hands, some of the state company's assets will not, according to the National Petroleum Agency (ANP).

David Zylbersztajn, ANP executive director, says Petrobras will sell some of its refineries and pipelines. He said that limiting Petrobras's participation in the refining and transportation of petroleum by selling some of these assets is an urgent priority and part of the government's drive to make Brazil's oil sector more competitive. According to Zylbersztajn, the average fee for transporting oil products charged in the US is about one third lower than it is in Brazil.

"There is no doubt that Petrobras's monopoly in the transportation of oil products and its refinery monopoly are not good for the Brazilian economy," he said. Of Brazil's 13 refineries, Petrobras owns 11.

Zylbersztajn criticized oil products distributors for not pressuring ANP about what he called "abusive" pricing practices by Petrobras.

He contends that Brazilian law has established that when there is a conflict regarding fees for transporting products, a distributor can appeal to the ANP so that the agency can resolve the dispute.

Brazil has 4,000 km of pipelines, some with idle capacity, that are mostly operated by BR Distribuidora, a Petrobras marketing subsidiary.

Strategy

The strategic plan to turn Petrobras into a global energy company is intended to prepare the company to face competition in newly deregulated environment, Reichstul said.

The lion's share (68%) of the 5-year, $32.9 billion capital budget will be invested in oil and gas E&P. The remaining outlays …