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Wednesday, February 21, 2024

Brazil’s Petrobras to pay out $8.5 billion dividend amid squabble

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Brazil's Petrobras to pay out $8.5 billion dividend amid squabble © Reuters. FILE PHOTO: A logo of Brazil’s state-run Petrobras oil company is seen at their headquarters in Rio de Janeiro, Brazil October 16, 2019. REUTERS/Sergio Moraes/File Photo

SAO PAULO (Reuters) -Brazilian state-run oil company Petrobras will distribute dividends of around 43.68 billion reais ($8.5 billion) on its third quarter results, the firm said on Thursday, amid controversy over its massive payouts.

Petroleo Brasileiro SA, as it is formally known, has been a cash cow for its investors in recent quarters, including the Brazilian government, which owns a controlling stake in the company.

For a second consecutive quarter, the firm will pay out to its shareholders at least double the amount distributed by each of the five biggest Western oil producers – Exxon Mobil Corp (NYSE:), Chevron Corp. (NYSE:), Shell (LON:) PLC, TotalEnergies and BP (NYSE:).

Exxon has said it will pay dividends of $3.7 billion, while the other four firms will pay out a figure between $1.14 billion and $2.7 billion, according to data compiled by Reuters. Nearly all global oil majors have reported blockbuster profits this quarter, helped by surging oil prices.

Petrobras’ near-term prospects are uncertain as it will once again be controlled by the leftist Workers’ Party after former President Luiz Inacio Lula da Silva defeated President Jair Bolsonaro in a runoff vote on Sunday.

The Brazilian oil giant is due to detail its third quarter results later on Thursday, but the huge dividends have prompted critics to argue that the payouts have led to underinvestment in the company’s core business.

Workers’ Party head Gleisi Hoffmann wrote on Twitter before the latest dividend was revealed that the payout policy “deprives the company of its investment capacity and only enriches shareholders.”

Earlier on Thursday, oil workers’ union FUP and Petrobras minority shareholders’ association Anapetro said in a joint statement they would challenge the approval of new dividends and sue the firm’s board of directors in court.

They say that while the company paid roughly 130 billion reais in dividends in the first six months of the year, investments made during the same period total only 17 billion reais.

Petrobras said in a securities filing that its dividend is in line with its shareholders’ remuneration policy, which allows it to pay out 60% of the difference between its operating cash flow and the money spent on investments, when the firm’s gross debt is below $65 billion.

A first installment of 1.67445 reais per share will be paid on Dec. 20 and the remainder is scheduled to be paid on Jan. 19, 2023, said the company.

($1 = 5.1167 reais)

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