Petrobras defends pricing policy amid mounting pressure

Petrobras' decision to keep its ex-refinery prices for oil products unchanged since July is part of a strategy to prioritize structural market factors over short-term factors, the company said.

The state-controlled company called for an impromptu press conference today to reinforce its commitment to international parity prices as inflation remains a pressing issue for the Brazilian government while fuel importers say Petrobras is dumping fuel prices.

The state-controlled company is currently considering a price increase in light of the recent rally in global oil markets.

Petrobras's price policy remains unchanged, chief executive Silva e Silva said. Trading and logistics director Claudio Mastella said the company focuses on structural factors to assess potential hikes, such as the recent strengthening of global oil demand or rising seasonal demand during the winter season in the northern hemisphere. The company's approach to keep short-term factors out of pricing decisions explain why some products can momentarily be below import parity prices, Mastella said.

Petrobras stressed that its role encompassed activities in the upstream and refining sector. The company said it sells gasoline for R2/l (140.7¢/USG), and that the remaining price markups were compounded down the supply chain by anhydrous ethanol blending, federal and state taxes and distribution costs and margins.

Fuel importers association Abicom has denounced Petrobras pricing policy as "predatory" as ex-refinery prices are well below replacement costs for imported cargoes. On 24 September, Argus assessed imported diesel with 10ppm sulfur content stored in the port of Santos at a R270/m³ premium over ex-refinery prices at Paulinia, in the state of Sao Paulo.

The announcement followed months of rising government pressure and posturing to denounce rising fuel prices ahead of next year's election. President Jair Bolsonaro recently called out fuel retailers and state government as the main culprits for the elevated diesel and gasoline prices in the past months.

The company's statement also aimed at reassuring potential investors as it committed to selling half of its refining capacity. The protracted divestment program lags behind schedule amid tepid foreign interest following the Covid-19-related fall in consumption and increased global focus on renewable energy and low-carbon investments.

By Amance Boutin