Petrobras president and CEO Maria das Graças Foster

Production at Petrobras, fell for nine consecutive months through February, compared with each of those same months a year earlier.

"As we expected, there was a decline in oil production in the first quarter," president and CEO Maria das Graças Foster said in a statement on Friday, 04/26. "As we said in our 2013-2017 investment plan, oil and gas output in Brazil in 2013 should be stable compared to 2012."

Production, she added, would be lowest in the first half of the year.

The output decline, the result of a platform-maintenance program in the Campos Basin, responsible for around 80% of Brazil's oil output forced an increase in oil imports, while reducing exports.

As a result, Petrobras' net import of oil and refined products, or the difference between exports and imports of crude oil and fuels, rose more than nine-fold in the quarter to an average 454,000 barrels a day, the statement said.

It has also undermined returns at the company's flagship exploration and production, or E&P, division. Profit there slipped by a fifth to 15.1 billion reais, compared with 18.8 billion reais in the first quarter of last year.

First quarter 2013 financial results

Petrobras’ net income was R$7.693 billion ($3.85 billion) in the first quarter of 2013.

The company said on that first-quarter profit fell 17 percent as oil-output fell, imports soared and fuel subsidies ate up cash needed for investment.

While the results beat analyst expectations, the Brazilian company failed again to fulfill a promise to rein in operating costs, which jumped in almost every major category compared with the first quarter of 2012. Profit margins also slipped.

Operating profit reached R$9,849 million, up 72% on the previous quarter due to readjustments in the price of diesel and gasoline, lower import costs and lower operating expenses.

Net income remained stable compared to the previous quarter, due to higher operating income which was offset by lower financial gains and higher tax on profits.

Compared to the first quarter of 2012, operating income was 16% lower, reflecting higher import volumes, the effect of exchange rate depreciation (13%) and higher operating expenses. Net income was 17% lower, due to lower operating income and no tax benefit.

Total oil and natural gas production amounted to an average of 2,552,000 barrels/day during the quarter, which was 2% down on the fourth quarter of 2012. As expected, production decreased due to the natural decline in the fields and more maintenance stoppages, concentrated in the first six months of the year.

Two production systems came into operation in the Santos Basin: The FPSO Cidade de São Paulo, in the pre-salt Sapinhoá field, and the FPSO Cidade de Itajaí in the post-salt Baúna field. The third system – the FPSO Cidade de Paraty is already being anchored in the Lula Nordeste field and will start production in late May 2013.

A new pre-salt production record of 311,000 barrels per day was reached on April 17.

The new discoveries were: South of Tupi and Florim in Transfer of Rights areas; Sagitário in the pre-salt Santos Basin and Mandarim in the post-salt Marlim Sul field in the Campos Basin.

The Recovery of Operational Efficiency Program in the Campos Basin (PROEF) showed gains of 34,000 barrels per day in oil and LNG production in the 1st quarter of 2013.

The Operating Cost Optimization Program (Procop) showed above expected overall results for the quarter, resulting in savings of R$1,260 million (one third of the target for the year).

Petrobras beat the oil processing record on April 7 (2,149 thousand barrels/day). The domestic market grew (+9%) in the quarter mainly met by increasing production of oil products (+10%) compared to the same period of 2012.

Diesel price adjusted twice (amounting to 10.7%) and one gasoline adjustment (6.6%).

Investments amounted to R$19,769 million, with 54% in Exploration and Production.

Peter Howard Wertheim is an international journalist based in Rio de Janeiro. He can be reached at: peterhw@frionline.com.br

Tags: Petrobras