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RIO DE JANEIRO (Reuters) - Petróleo Brasileiro SA expects to spend 30 percent more in exploration, production and refining projects this year, signaling that efforts to cut debt and preserve cash are helping Brazil's state-controlled oil company regain investment capacity.
Chief Executive Officer Pedro Parente told reporters at an event in Rio de Janeiro that capital spending at Petrobras (PETR4.SA) could rise to $19 billion in 2017 from $14.6 billion in 2016. Investments could be maintained around those levels in coming years if Petrobras sticks to strict fuel pricing and preserves cash, he said.
Parente said the company's pricing policies for gasoline, diesel and other fuels will strictly follow market guidelines and not macroeconomic policy instructions.
Parente faces several obstacles including oil price volatility, a corruption scandal highlighting governance flaws, and the legacy of policies that forced the company to enter low-yielding, money-losing business segments.
Existing cash of about $22 billion should be enough to allow Petrobras to undertake activities for two and half years, Chief Financial Officer Ivan Monteiro said at the same event.
According to Monteiro, management strategies are helping the company regain the trust of global investors and the ability to spend wisely on exploration and production. He expects the company's debt ratings, currently below investment-grade, to be upgraded at least once before the end of this year.
"Our cash and financial position is a source of tranquility for the time being," Monteiro told reporters at the event.
CEO Parente wants to cut the company's $130 billion of debt, amassed after years of state-led policies overstretched the company.
Preferred shares (PETR4.SA), the company's most widely traded in Brazil, shed 0.3 percent to 15.45 reais in late Wednesday morning trading. The stock is up almost 4 percent this year.
In September, Petrobras pledged up to $74.1 billion in capital spending for the 2017-2021 period, compared with a $98.4 billion target in the prior 2015-2019 plan.
Reporting by Marta Nogueira; Additional reporting by Roberto Samora in São Paulo; Writing by Guillermo Parra-Bernal; Editing by Chizu Nomiyama and Grant McCool