Petrobras and the inflation

Expected to be one of the biggest players on the Libra oilfield auction that will take place on Monday, Petrobras is in a difficult position. The state controlled company has been crippled by the government interventions in its management -- from having to invest in areas that are not of its core interest, as ethanol, for example, to being impeded to raise gasoline prices because of the authorities fear of inflation. 

Petrobras is also in a tough position because of the new rules for oil exploration in the pre-salt area. The company is legally obliged to have a minimum share of 30% in all the fields. Since there are a lot of commitments still to be made, analists thing this will slow down the investment on future fields.

For this reason the government is cooking a new legislation to give some fiscal relief to Petrobras, according to Folha de S. Paulo. The company will probably not be taxed for the profits obtained from its foreign subsidiaries in the rent for equipment destined to the oil development in Brazil. There has been also some talk about another gasoline price increase to be allowed this year, but this is stil to be confirmed.