CEO of Petrobras declared that fuels produced by the state-owned company are cheaper, but distributors inflate value to the consumer
The president of , Magda Chambriard, said on Sunday (Dec 29, 2024) that the state-owned company was successful in its strategy of “Brazilianizing” the price of fuels produced in its refineries and that even selling a product at a value lower than the PPI (Import Parity Price), was able to make a profit. The oil company recorded a positive result of R$32.6 billion in the 3rd quarter of 2024.
In an interview with Band Newsthe executive declared that she was satisfied with the company’s commercial strategy. According to Chambriard, the gasoline and diesel produced by the company are “sensibly” more competitive compared to the end of the former president’s (PL) government. On the other hand, he said that the positive effects of this “Brazilianization” are not fully achieved by the end consumer, as the state-owned company no longer has influence on the distribution of fuels.
Petrobras sold its arm in the distribution sector to Vibra in July 2019. The decision was part of the state-owned company’s divestment plan initiated by the MDB government and continued by Bolsonaro. During the 2022 presidential campaign, the president (PT) used the expression “Brazilianize” several times in relation to fuel prices.
“We are making money after Brazilianizing prices, we are offering a significantly cheaper fuel price than on December 31, 2022 and what reaches the consumer is part of ours, but there is part of other actors who are not ours. The Brazilian price goes to the refinery, we no longer have access to the end consumer”said Chambriard.
According to the executive, Petrobras’ return to the distribution sector is not in the company’s short-term interest. However, the state oil company is aiming for a new plan to sell its fuels directly to large consumers. In other words, a direct sale in large quantities.
A Petrobras partner in this new strategy is . Chambriard stated that companies negotiate the purchase and sale of diesel with a larger portion of biodiesel to decarbonize their mining activities, at the same time that purchasing a large quantity directly from Petrobras – without going through a distributor – alleviates the price. end.
“Not for the time being [voltar ao setor de distribuição]what we are thinking about is something else, the sale of fuel to large consumers. We have a partnership with Vale to resell some special derivatives such as diesel with a share of renewables”said Chambriard. “Direct life for large consumers does interest us”.
HIGH DOLLAR AND UNCERTAINTY WILL BE A CHALLENGE
In October, the World Bank presented a report that points to a drop in the value of a barrel in 2025. According to the entity, there is an oversupply of commodity which should influence the price of oil downwards and keep it at an average of US$73, the lowest level since the covid-19 pandemic. In 2024, the average was US$80. Here is the report (PDF – 1 MB, in English).
In November, the World Bank published an analysis that considers the effects of global conflicts on the price of commodity. The text says that any increase in the intensity of conflicts close to producing countries – in the Middle East, for example – would result in an escalation in prices, which even a reduction in consumption would not be able to stop.
“If global oil supply were to decline by 2 million barrels/day due to a conflict-related shock, Brent crude prices could peak at $92 a barrel.”says the text. “For 2025 as a whole, the price of Brent crude oil could average $84 a barrel, 15 percentage points above the baseline forecast but just 5 points above the 2024 average price.”. Here is it (PDF – 2 MB, in English).
If the price of a barrel rises, Petrobras will be under more pressure to make adjustments to the price of gasoline and diesel. If it decides to shield itself from escalation, Petrobras could leave an opportunity to generate cash on the table. On the other hand, cheaper oil also impacts the revenue of the state-owned company, which, as Chambriard has already stated, has its DNA in oil and gas.
In addition to these uncertainties, the appreciation of the dollar will also weigh on Petrobras’ balance. As the state-owned company imports oil, a high exchange rate for the US currency enhances the gains for the government, its main shareholder, but on the other hand the state-owned company also has a series of costs in dollars.
To the Poder360the secretary general of , Felipe Reis, said that Petrobras needs to be careful to read the international market and maintain a strategy that does not impact the state-owned company’s cash flow. In the expert’s view, it is possible for the oil company to follow its pricing policy and maintain its profitability, but it is necessary to evaluate ways to mitigate the impacts of this volatility.
“Brazilianizing would mean removing price formation from the volatility of the dollar and the price of a barrel, when it ignores these factors it assumes an opportunity cost and also ignores some cost elements that are linked to the dollar, so this certainly impacts its cash flow, but there are strategies to mitigate the impacts of international volatility and this is what needs to be evaluated”said Reis.
