Brazil Mantega Seeks ‘Realistic’ Petrobras Plan, BNDES Says

Brazilian Finance Minister Guido Mantega asked Petroleo Brasileiro SA (PETR4)’s management to set a “more realistic” investment plan and focus on efficiency, said Luciano Coutinho, president of Brazil’s state development bank.

The state-controlled oil company is “trimming excess” from its five-year investment plan as it continues to expand, said Coutinho, who’s a board member at Rio de Janeiro-based Petrobras. Any reduction in spending would be a “realistic adjustment” and would allow the company to grow in a “less aggressive” way, Coutinho told journalists in London today. Mantega is also the chairman of the Petrobras board.

Petrobras Chief Financial Officer Almir Barbassa said yesterday the company may reduce spending as it revises a $224 billion investment plan. The company invested 15.9 billion reais ($9.8 billion) in the first quarter, down 11 percent from 17.8 billion reais in the year-earlier period.

“The capex of Petrobras is so large, it has such a number of large projects simultaneously,” Coutinho said. “We put pressure for the management to be very efficient, because if you’re not efficient in operating your capex, your rate of return in many of the projects will diminish.”

Petrobras’s board asked the company on May 13 to cut investments by $35 billion after it presented a $260 billion 2011-2015 business plan, Rio de Janeiro-based O Globo newspaper reported, citing officials at the company it didn’t identify.

Supply Bottlenecks
Rio de Janeiro-based Vale SA (VALE3), the world’s largest iron-ore producer, and Petrobras face bottlenecks in terms of equipment supply and labor shortages, Coutinho said. An increase in supply is necessary for the mining and oil and gas industries, he said.

“Both Petrobras and Vale have very ambitious capex programs,” Coutinho said. “It’s difficult to implement these programs. Maybe they trim an excessive and not very realistic investment plan. Moderation is good also in this area.”

Petrobras fell 1.2 percent to 24.10 reais. The shares have fallen 12 percent this year, compared with the benchmark Bovespa index’s 9.3 percent decline.

BNDES expects to lend about 145 billion reais this year, compared with about 170 billion reais in 2010, Coutinho said.