Petrobras becomes 3rd biggest oil firm with share issue

SAO PAULO: Brazil's state-run Petrobras became the world's third-biggest oil firm by market capitalization Monday as it completed a record share issue expected to bring in around 70 billion dollars.

After selling the stock on the New York stock exchange from last Friday, in the form of American Depository Receipts, the company began also selling the shares Monday on the Sao Paulo stock exchange.

Those shares rose 1.93 percent to 30.23 reals by the end of trading -- higher than the 29.65 reals the new shares were priced at for trading, showing strong demand.

The offering has made Petrobras the third largest oil company in the world after US-based ExxonMobil and PetroChina.

Brokers, though, said a long-term "uncertainty, a negative pressure" lingered over the shares because of doubts over investors' returns.

The government's increase in its stake in Petrobras, from 40 percent to 48 percent, also generated concerns.

"The degree of government intervention in decisions during the whole (capitalization) process was too high for a publicly listed company," said Miriam Leitao, an economic columnist for the newspaper O Globo.

She noted that Petrobras had lost a quarter of its value over this year because of that preoccupation.

"Small investors are in the hands of the government," Fabio Knczuk, an economics professor at the University of Sao Paulo, told AFP.

Petrobras is to use the proceeds from the share sale to explore the offshore oil fields, which are so big they could make Brazil a major exporter.

The company wants to boost capital expenditure over the next five years to 224 billion dollars to exploit the fresh reserves.

Petrobras estimates the so-called subsalt fields could more than triple its existing proven oil reserves of 14 billion barrels.