Petrobras Postpones $25 Billion Stock Offering

 Petroleo Brasileiro SA, Latin America’s biggest company by market value, delayed the sale of as much as $25 billion of stock until September because a price hasn’t been set in a related deal to buy oil reserves from the government.

The offering to minority shareholders, originally planned for July, is tied to an agreement to buy rights to as much as 5 billion barrels of oil from the government with stock. Petrobras, based in Rio de Janeiro, said in a statement late yesterday industry regulators will assess the value of such reserves by the end of August.

Petrobras needs the proceeds from the sale to complete the 2010 portion its $224 billion investment plan, said Anisa Redman, an oil analyst at HSBC Holdings Plc in London, and Ricardo Cavanagh from Raymond James in Buenos Aires. The delay increases the risk that the sale will be further delayed because of the presidential election in October, Redman said.

“The election is the cut-off point,” said Redman in a telephone interview yesterday. “After that, it will be more difficult.”

Petrobras’s depositary receipts in Germany dropped to the equivalent of 28.65 reais at 10:45 a.m. Frankfurt time, down from the 29.11 reais closing price of the Sao Paulo-listed preferred shares yesterday. The Sao Paulo shares have declined 5.7 percent in the past 12 months, compared with a 31 percent gain for Brazil’s benchmark Bovespa index.

Bureaucracy Creeps In

Petrobras plans to sell the shares to help finance investments of $224 billion through 2014 to more than double output to 5.38 million barrels a day by 2020. The company is looking to develop offshore reserves in the so-called pre-salt region off Brazil’s coast, home to discoveries including Tupi, the largest find since Mexico’s Cantarell in 1976.

“Bureaucracy can creep in and my sense is they would rather get this done sooner than later,” Gianna Bern, president of Brookshire Advisory & Research Inc., said yesterday by telephone from Sao Paulo.

Brazil’s oil regulator, known by its Portuguese acronym ANP, said yesterday its board authorized the hiring of Gaffney, Cline & Associates to assess the value of the barrels that the government plans to sell Petrobras in exchange for stock.

‘Indispensable’ Timing

Senator Delcidio Amaral, who’s in charge of drafting an oil bill, said in an interview in Brasilia that ”what matters is that Petrobras has a deal for September,” adding delays are part of the process.

Petrobras said June 2 it named Banco Bradesco SA, Citigroup Inc., Itau Unibanco Holding SA, Bank of America Corp.’s Merrill Lynch, Morgan Stanley and Banco Santander SA as global coordinators of the sale. The following week, Petrobras said it hired Banco do Brasil SA, Latin America’s largest bank by assets, to manage the domestic sale.

Brazilian Energy Ministry official Marco Antonio Almeida said June 17 that the share sale and the oil swap happening at the same time are “indispensable.”

“Things will have to match somehow; this marriage looks indispensable to me,” Almeida, the ministry’s secretary for oil, gas and renewable fuels, said in an interview in Brasilia. “Either the capital increase happens a bit later or we succeed in accelerating the oil pricing process.”