(Updates with CEO comments in second paragraph.)
Sept. 28 (Bloomberg) -- Galp Energia SGPS SA, Portugal’s biggest oil company, expects to complete a planned capital increase at its Brazilian unit this year as it seeks to fund offshore projects in the Latin American country.
“We expect the transaction will close this year,” Chief Executive Officer Manuel Ferreira de Oliveira told reporters today in Oporto, northern Portugal. “We expect to take decisions about this around the end of October, beginning of November.”
Galp plans to carry out a capital increase at the Brazilian unit to raise at least 2 billion euros ($2.7 billion). In April, it said it wanted to carry out the share sale through a private placement rather than a public offering in the stock market. Ferreira de Oliveira on May 23 said that the companies looking to become partners in its Brazilian unit were mostly from Asia.
“We are in a phase in which we are working with a very reduced group of consortiums,” he said today.
The company on July 29 raised its 2020 output target in light of “exceptional” progress in Brazil and said “several parties” had shown an interest in buying shares in the unit. Galp is expanding exploration in regions such as Brazil’s Santos Basin and Angola to improve access to crude and lessen dependence on refining and fuel sales in Portugal and Spain.
Galp has stakes in four offshore blocks in the Santos Basin, including the Lula and Jupiter finds. The Lula field, formerly known as Tupi, holds an estimated 6.5 billion barrels of recoverable oil and equivalent. Galp is also a partner with Petroleo Brasileiro SA, Brazil’s state-controlled oil company, in Cernambi, which holds 1.8 billion barrels of estimated reserves.
Galp plans to invest 1.2 billion euros to 1.5 billion euros this year in Portugal and elsewhere. It plans about 3.5 billion euros in spending from 2012 to 2015, with exploration and production representing 70 percent of the total.
The Portuguese oil company this year is completing an investment of 1.4 billion euros on upgrading its refineries in Oporto and Sines, a project that will allow Galp to increase diesel production. It’s also building a cogeneration unit at the Oporto refinery. Galp’s refinery in Oporto can process about 90,000 barrels a day, while the Sines plant has a 220,000- barrel-a-day capacity.
“At this moment, Galp is operating its refineries with negative margins,” Ferreira de Oliveira said today.
Galp shares have slipped 3.6 percent this year, giving the company a market value of 11.5 billion euros. Eni SpA, Italy’s biggest oil company, and Portuguese holding company Amorim Energia BV each control a third of Galp.
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