Petrobras, the Brazilian national oil company, is preparing to
raise nearly $32.0 billion from minority shareholders. Combined
with the $42.5 billion worth of shares issued to the Brazilian
government in exchange for five billion barrels of proved oil
reserves, this is the biggest share offering in history.
However, Petrobras' future is dependent on its relationship with
the Brazilian government. For Petrobras, the objective of such
aggressive share issuance is to help fund the development
program of offshore oil fields, mainly within the pre-salt
layer, as part of the company's $224 billion capital expenditure
plan to double its oil output by 2014. For potential share
buyers and the market, the key concern centers on Petrobras'
future relationship with the Brazilian government, which already
owns one third of the company and the majority of votes.
Petrobras was founded in 1953 as part of former president
Getulio Vargas' efforts to nationalize the country's oil
industry. In 1997 the government privatized Petr