Petrobras benefits Brazilian society by taking longer to raise fuel prices in periods when prices are high in the foreign market, said this Friday (14th) the executive director of Exploration and Production, Fernando Borges.
The practice, according to him, is managed within a range of values considered by the company. The executive reiterated, however, that the oil company follows market values, while avoiding passing on volatility to consumers in Brazil.
“We are very close to the market value. We work with a small band to signal when to readjust down or up. We spend more often the reduction and take a little longer to pass the rise, we are benefiting Brazilian society” , said Borges, when participating in a live on the epbr agency channel.
“How many times have you heard of ‘where’s Petrobras’ contribution?’ It, as far as possible, has been made within a band that we work with”.
A Reuters survey pointed out this week that the company took longer to adjust prices at refineries this year in periods when values were high in the foreign market compared to intervals in which fuels retreated.
In the first half, when fuel prices abroad were soaring amid the outbreak of the Ukrainian War, the intervals between price increases at the state oil company’s refineries ranged from 38 to 59 days for diesel and from 57 to 98 days. for gasoline.
When the commodity’s downward movement began in July, amid fears of recession abroad, among other issues, the period between reductions was between 6 and 38 days for diesel and between 9 and 17 days for gasoline.
The executive also pointed out that there is currently great volatility in the international oil market and that the company avoids passing on these movements immediately.
According to Borges, when considering the variation range with which the company works, Petrobras is following international prices.
“We have the responsibility to lead the company respecting the market price parameter, even to not cause disturbance, since the country depends on imports, and also not to cause unnecessary damage to the company”.
After the executive’s statement, Petrobras published a statement saying that it “maintains its commitment to the practice of competitive prices and in balance with the market, while avoiding the immediate transfer of external volatilities and the exchange rate caused by conjunctural events “.
Calculations made by the association that brings together independent fuel importers Abicom show that gasoline prices are currently 12% below import parity, while diesel prices are 16% below.
During his participation in the live, Borges said that Petrobras’ parity calculations are different from other market participants, such as Abicom.
Borges also commented on a political risk that hinders the sale of refineries. He said that in the past the company suffered billions of losses by maintaining a significant price lag for years and that the idea that prices will not be controlled is not “sedimented” so far in the country.
“You have not yet established that fuel prices will not be controlled, that they will follow the market. This, in my view, is the main factor in our greater difficulty in selling in refining,” he said.
The executive stressed that since 2016 the company has followed market prices.
During the interview, he further reiterated that the route 3 pipeline should only come into operation in 2024.
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