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This excerpt taken from the PBR 20-F filed May 22, 2009. Trends
We plan to expand all segments of operations in our target
markets. In support of this goal we plan total capital
expenditures of U.S.$174.4 billion over
2009-2013.
Of this total, 59% is in the upstream segment, where constant
investment in exploration and development is needed to exploit
newly discovered resources and offset natural declines in
production from existing fields as they mature. Based on our
slate of development projects, we have set a target of
increasing production by 8.8% annually over the period 2008 to
2013 while replacing our reserves through organic growth.
The price we realize for the oil we produce is determined by
international oil prices, although we generally sell our oil at
a discount to the Brent and West Texas Intermediate (WTI)
benchmark prices because it is heavier and thus more expensive
to refine. International oil prices reached record levels in
2008, driven largely by three factors: (i) continuing
increases in global demand for oil products, particularly for
middle distillates; (ii) increasingly tight oil production
and refining capacity, aggravated by growing expectations of
continued supply-side constraints; and (iii) international
geopolitical risks, including civil strife in Nigeria and
worries over Iran’s nuclear program, which magnified
upward
pressures on prices. However, from mid-August until the end of
2008, there was a strong downward correction in oil process, in
part due to the recent global financial crisis. The
International Energy Agency (IEA) projects that after full
recovery from the global economic crisis, the global energy
demand will continue to grow and that, in the absence of
concomitant increases in supply-side investment or stronger
policy action to curb demand growth in all countries the world
would be faced with higher energy prices in the medium to long
term.1
During 2009 to 2013, we plan to increase our refining throughput
and our capacity to refine heavier crudes. During 2008,
downstream gross margins varied between -6 and 11 percent
reflecting the fluctuation in international prices. Future
refining margins will depend on capacity utilization in the
global and Brazilian refining industries and the relative prices
and volumes of light and heavy crudes that are produced and can
be processed.
Our net-debt-to-equity ratio is targeted to remain in the range
of 25-35%
from 2009 and 2013, based on an estimated average exchange rate
of R$2.00 per U.S.$1.00.
The dividends we pay to shareholders depend on our earnings and
other factors. Under Brazilian law, shareholders are entitled to
a mandatory dividend of 25% of annual adjusted net income.
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