Petrobras net plunges, challenges new CEO

Petrobras' profit plunged 52 per cent in the fourth quarter, frustrating expectations the company can control the cost of an ambitious expansion plan and underlining the challenges faced by new chief executive Maria das Gracas Foster. Fourth-quarter net income fell to 5.05 billion reais (Dh11.7 billion) from 10.60 billion reais in the year-earlier quarter, as rising operating costs ate into an increase in revenue, the company said in a statement to Brazilian securities regulators. The average estimate of 10 analysts surveyed by Reuters was for a profit of 9.20 billion reais. Foster, 58, who was approved in her post on Thursday shortly before Petrobras released its results, will have to manage a $225 billion five year investment programme — the world's largest oil spending plan — that keeps growing. Petrobras also on Thursday boosted its planned order for offshore drilling rigs to 26 from 21, and agreed to pay $76.3 billion over 15 years to lease the vessels in its largest ever contract, a company executive told Reuters. Article continues below Spending spree The order continues a six-year spending spree under Foster's predecessor Jose Sergio Gabrielli to help Brazil challenge the US as the world's No 3 oil producer, behind Russia and Saudi Arabia, by 2020. Gabrielli committed Petrobras to nearly triple its output to 6.4 million barrels a day in 2020. Despite the heavy spending, in December 2011 Petrobras' global output of 2.72 million barrels a day was lower than a year earlier.