Brazil: Record Profit at Petrobras and a Little Help from Arab Building Boom

Petrobras Brazil’s state-controlled oil and gas multinational Petrobras has just announced that it posted a record net profit of 21.93 billion reais (US$ 13.5 billion) in the first six months this year, 37% more than the 16.02 billion reais (US$ 9.97 billion) recorded in the same period of 2010.

The company’s profit also grew in the second quarter this year. It reached 10.94 billion reais (US$ 6.76 billion) and was 32% higher than the 8.29 billion reais (US$ 5.12 billion) recorded from April to June 2010.

The company ascribes the result to an overall increase in revenues from sales, which reached 116.2 billion reais (US$ 71.8 billion) and was 12% higher than in the same period of 2010.

Petrobras’ financial director, Almir Barbassa, stated that the first quarter result is a consequence of higher domestic sales of derivatives and increased production during the period.

Domestic oil and gas production grew by 2% and reached an average of 2.6 million barrels of oil equivalent per day. The volume of oil derivatives such as diesel and gasoline that were sold in the country grew by 9%. Domestic market sales of natural gas grew by 7%. These products were sold at higher prices than in 2010, according to Petrobras.

The state-owned oil company invested 32 billion reais (US$ 19.7 billion), 16% less than in the same period of 2010. Out of the total investment, 46% were allocated to exploration and production and 38% went into the supply sector.

According to the second quarter report, the company’s net indebtedness by the end of the first half this year stood at 68.8 billion reais (US$ 42.5 billion).

More Wood

Exports of wood from Brazil to the Arab nations grew 19% from January to July this year, as against the same period last year. In the first seven months of 2011, sales of the product to the region totaled US$ 28.264 million, as against US$ 23.752 million in the first seven months of 2010.

“This is due to a ‘boom’ in civil construction in these nations,” said Jeziel de Oliveira, superintendent of the Brazilian Plywood Industry and Exporters Association (Abimci). “While there is this boom in construction in the region, Brazil will continue exporting there,” said the executive.

According to Oliveira, the main buyers are Saudi Arabia, Bahrain, the United Arab Emirates and Iraq. The executive stated that, with the 2008 global financial crisis, traditional markets for Brazilian wood, like the United States and countries in Europe, reduced their imports, causing national products to seek new markets, like the Arab world.

The executive stated that sales to the Arabs have been collaborating to maintain Brazilian exports at a moment of low purchases by traditional buyers. “This is helping Brazil. There are companies that started exporting to the Arabs a short while ago. It is an important market, especially for the civil construction sector, which is the one we export to most, where we sell products like plywood, floorboards, plates and doors, etc.”

He does not, however, believe that exports to the region should continue growing up to the end of the year. “The tendency is for stability. Sales will be maintained, but I do not expect there to be great leaps,” he said.

In total, the country exported US$ 1.1 billion in wood from January to July, also including charcoal and wooden products.

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