Petroleo Brasileiro SA (PBR:US), facing a growing scandal over its $1.2 billion purchase of a refinery in Texas, said it bought the plant to maximize returns on heavy oil that it couldn’t refine in Brazil.
The Pasadena plant was still realizing a profit in 2008 when Petrobras began to negotiate increasing its stake, Chief Executive Officer Maria das Gracas Foster told a Brazilian congressional commission today. The state-run company recognized a $530 million loss from the deal, she said.
Opposition lawmakers are pushing for a formal investigation into the 2006 purchase from Astra Oil Trading NV, which Foster said paid at least $360 million for the plant. President Dilma Rousseff, then Petrobras’ chairwoman, said last month that directors approved the $370 million purchase of a 50 percent stake without knowledge of a clause that later forced it to buy the rest as part of a $820.5 million legal settlement.
“Now, looking back, at the facts, it definitely wasn’t a good deal,” Foster said.
The outcry over the acquisition is shining the spotlight on Petrobras’s runaway refining investments and project delays that contributed to 17.7 billion reais ($7.9 billion) in losses for the unit last year. Petrobras, which loses money on fuel sales because of government price caps, is working to make domestic and foreign prices converge over time, Foster said.
Foster said the depreciation of the Brazilian real will help Petrobras in 2015 when it becomes a net exporter of petroleum. The company should increase production 7.5 percent this year, improving its outlook after cutting costs last year, she said.
The Pasadena refinery had $58 million in profit in January and February, after years of losses since Petrobras’s initial purchase of half of the plant, according to Foster. She said refining oil abroad has been part of the company’s growth plan since 1999.
While the company has had offers to buy the refinery, Foster said the board doesn’t recommend divesting Pasadena after years of investments and a federal investigation into the deal. Foster said margins are “recovering” what was lost after the financial crisis of 2008.
Petrobras fell 3.8 percent to close at 15.32 reais in Sao Paulo.
Opposition members collected enough signatures this month to create a separate commission to investigate the Pasadena deal, prompting government-allied senators to propose an expanded commission to also look into Sao Paulo’s metro and a port in Pernambuco state. The senate could decide today to expand the probe and to include representatives from the lower house.
The court that oversees government spending and the Public Ministry is investigating Petrobras for the refinery purchase. The state-run company said it’s cooperating with government agencies and created its own committee to investigate.
“We know how important it is to have a healthy Petrobras, both for the importance it has in the context of the national economy, and for what Petrobras represents of Brazil in international markets,” Foster said.
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