REUTERS

RIO DE JANEIRO PETROBRAS Brazil’s stateled oil company, and its latest business plan have a serious problem.

The company is likely to struggle to find the cash to pay for the hundreds of ships and dozens of oil fields, drillrigs and platforms it wants in order to catapult Brazil into the ranks of the world’s topfour oil producers by 2020.

On Thursday, Petrobras made the world’s largest corporate investment programme even bigger, committing the company to $236.5 billion of spending by the end of 2016. That’s nearly $130 million a day for five years, and $11 billion more than its 2011-2015 plan.

Without raising fuel prices, something Petrobras’ controlling shareholder, the Brazilian government, hasn’t allowed it to do since 2008, the plan is a fiction, said Lucas Brendler, oil industry analyst with Geração Futura, which manages $3 billion of stocks and bonds in Porto Alegre, Brazil. Petrobras, which two years ago was one of Geração Futura’s biggest holdings, now only makes up about 5 percent of its portfolio.

Worse still, the plan’s cuts in output targets, the first in the company’s history, are likely to be bigger in coming years.

“Without a price hike the company’s accounts just don’t add up; they don’t even come close,” Brendler said.

“If they don’t get the fuel price rise, the outlook for the company and its share price is going to shrink even more.” Investors appear to agree.

Petrobras preferred shares, the company’s most-traded class of stock, fell for a second day on Friday, shedding 1.54 percent in early afternoon trading to 17.89 and on track for its lowest close in eight months.

A fuel price increase is unlikely, at least this year, said Luciano Rostagno, economist and chief strategist at the Sao Paulo unit of German bank West LB.

Transportation prices, which are closely linked to vehicle fuels, weigh heavily on Brazil’s consumer price index. President Dilma Rousseff is dead set against anything that might spark inflation or slow growth, especially in the face of the European debt crisis and potential global slowdown.

“With the economy facing trouble, the currency weak, oil prices down and government efforts focused on lowering interest rates, a fuel price hike is almost unthinkable,” Rostagno said.

Even Petrobras’ chief executive, Maria das Gracas Foster, agrees a fuel price increase is necessary. Late on Friday, she told reporters in Rio de Janeiro that the price of fuels needed to rise in order to make the investments it has announced.

But her calls may be in vain, at least this year. On Wednesday, Brazilian energy minister Edson Lobão said a decline in benchmark crude prices means there is no chance of a fuel price increase this year.

While Petrobras is controlled by Brazil’s government, most of its stock is owned by non-government investors.

The fuel price freeze is one of the reasons Petrobras stock is worth less today than when it began announcing giant offshore oil discoveries in October 2007.