Petrobras to shift focus of fuel pricing strategy

Petrobras will refocus its fuel pricing policy to use international prices as a reference — rather than aim for parity — but the change will be more rhetorical than fundamental, chief executive Jean Paul Prates said.

The Brazilian state-controlled oil company under the country's previous president Jair Bolsonaro had focused on what it called import parity pricing, based on international references. Prates had committed to continuing to use these references after he took over under new President Luiz Inacio "Lula" da Silva in January, but he differentiated it with a new focus on international pricing.

With import parity, it is "imposing on the market" a price set across the globe, he said at the CERAWeek by S&P Global conference in Houston, Texas. "It doesn't make sense. Otherwise, no country would run after being an oil producer."

He emphasizes that "Petrobras' policy is not Brazil's policy," and that the government of the new leftist president has not intervened in pricing decisions in the company.

"We will manage our price the best way for the company, and that is fair," he said.

Petrobras will aim to become a vertically integrated, global energy leader, while the company under Bolsonaro had looked to sell assets, including refineries, a plan that Lula said he opposed.

Brazil's government in early March asked Petrobras to freeze asset sales for 90 days, a move that Prates said will not lead to any disruptions but is a chance for both sellers and buyers to review terms.

But Prates does hope for a review of recent taxes that Brazil imposed on crude exports for four months. The move will not likely be successful in increasing refinery run rates, and could lead to increased diesel imports in refineries not calibrated to best run the domestic mix.

"We think this will be temporary," Prates said, adding he favor dialogues first, and that the oil producer associations would be the ones to decide on whether to file legal complaints again the policy.

By Carla Bass