By JEFF FICK
RIO DE JANEIRO -- Brazil's government will allow state-run energy giant Petroleo Brasileiro, or Petrobras, to raise gasoline prices by Oct. 21, the Estado de Sao Paulo newspaper reported Monday.
The price increase of about 8% for gasoline at the refinery gate would help shore up Petrobras's finances ahead of the sale of Brazil's largest offshore oil discovery under new production-sharing agreements also set for Oct. 21, the newspaper said.
Under the agreements, Petrobras must hold a 30% stake and operate the field, known as Libra and estimated to hold between 8 billion and 12 billion barrels of recoverable oil. Petrobras's share of the signing bonus for Libra will be about $2 billion.
Petrobras sells gasoline at about a 30% discount to international benchmark prices, with the government reluctant to authorize higher prices for fear of stoking inflation.
The subsidized fuel sales have caused steep losses in Petrobras's refining division and raised concerns the company will be unable to carry out its plans to invest $237 billion through 2017.
The problems have been exacerbated by a weaker real versus the dollar, which drives up the cost of imported fuels.
Dow Jones Newswires