This excerpt taken from the PBR 20-F filed May 22, 2009.
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 Irans 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.