RIO DE JANEIRO--Recent weakness in Brazil's currency is raising alarm bells at state-run energy company Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras, because of the firm's heavy dollar-denominated debt load, the company's chief executive said Friday.
"The foreign-exchange rate, as it is right now, is not good for Petrobras," Chief Executive Maria das Gracas Foster said on the sidelines of an event. Brazil's real has tumbled in value against the U.S. dollar in recent weeks amid growing expectations the Federal Reserve will soon taper its asset-buying program known as quantitative easing.
Early Friday, the real reached its weakest level against the greenback in four years at BRL2.1508 pre dollar, according to Tullett Prebon via FactSet.
Petrobras has more than $100 billion in outstanding debt, with Ms. Foster noting that 78.2% was denominated in U.S. dollars. Much of the company's exploration and production costs are also linked to the dollar, she said.
The real has lost about 4% of its value against the dollar in recent weeks, and similar moves have led to financial losses because of the impact on the company's debt.
In addition, Petrobras has been importing greater volumes of gasoline and diesel to meet domestic demand that it sells at a loss in the local market because of a disparity between international and domestic fuel prices. The weaker real will exacerbate losses because of the price disparity.
Petrobras also plans to be "selective and focused" in its participation of upcoming licensing rounds of oil and natural gas exploration concessions, Ms. Foster said. Petrobras is working to establish consortia for the country's first auction of pre-salt oil acreage, she said.
The company would like to increase its 30% share guaranteed by Brazil's production-sharing regime, Ms. Foster said.
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