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
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.
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