The most indebted publicly traded company, Petroleo Brasilero (NYSE:PBR), is looking for partners to help finance its projects ranging from northeast Brazil to Angola.
China Petroleum & Chemical Corp. and GS Energy are two companies the Brazilian-based Petrobas is recruiting to help take on some of the costs of building refineries to supply Brazil’s growing oil demand, reports Bloomberg. The company sold half of its African assets to Grupo BTG Pactual in an effort to raise cash for its new ventures.
Petrobas plans to spend $237 billion through 2017 as it looks to develop the ultra-deepwater Libra field, Brazil’s biggest discovery. Notoriously bad at predicting costs of these projects, the company is seeking foreign help to manage costs and help with refining knowledge after similar projects have seen their costs quadruple.
The Northeast project is a prime example; set to be the first refinery to open in Brazil since 1980, Petrobas saw the initial cost analysis balloon from $2.8 billion to $12 billion, causing the start date to be pushed back from 2011 to 2014.
The company has seen a steep decline in its stock price in June, dropping more than 15 percent and putting it on pace for the biggest decline since December 2008. They’re looking to cut costs by $14.2 billion and raise assets of up to $9.9 billion.
Brazil as a whole, and Petrobas in particular, have been affected by slowing economic growth and ill-advised government meddling. They have access to huge oil reserves, but their ability to extract is inefficient and costly, begging the question: could any American companies swoop in as a partner?
Undoubtedly Chevron (NYSE:CVX), Exxon (NYSE:XOM), and British Petroleum (NYSE:BP) have all looked into Petrobas as a potential partner. They would be prime candidates to help finance some of Petrobas’s projects and also help with their struggling refining process.
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