Brazil’s state oil company Petrobras will at least double the largest international oil producer in its second-quarter dividend, boosting government coffers amid a tense presidential campaign.
The five largest Western oil producers – Exxon Mobil Corp., Chevron Corp., Shell PLC, TotalEnergies and BP – recently posted record cash distributions to shareholders between $4 billion and $7.6 billion. But nothing came close to his $17 billion payout for Petrobras.
Last month, Brazil’s government, which controls producers with a majority voting power, asked Petrobras and other state-owned companies to increase their dividends to fund additional federal spending.
The government of President Jair Bolsonaro, who faces a tough re-election race later this year, evaded a constitutional spending cap last month to fund a massive cash transfer program popular among low-income voters. As a result, calls for help were raised.
Petrobras will distribute about 60% more of its $10.5 billion (54.33 billion reais) profit to its shareholders. Critics said the huge payments lead to underinvestment in the business.
Petrobras’ dividend was almost five times higher than that of Saudi state-owned Saudi Aramco, the world’s largest oil company, which produces 13 million barrels of oil equivalent (boed) per day.
Saudi Aramco distributes $18.76 billion to shareholders on a quarterly basis. The next dividend will be announced on August 14th.
US producer Exxon, which posted the highest quarterly profit of the five companies, spent $7.6 billion on distributions to shareholders.
Critics say Mr. Bolsonaro is trying to improve his chances of re-election by enforcing short-term spending measures. Polls show him trailing leftist former president Luis Inacio Lula da Silva.
Dividend payments will be made by Petrobras prior to the first ballot scheduled for October 2nd.
In a webcast last week, Petrobras executives said the special dividend payment would not affect the company’s investment plans. Petrobras plans to hold $8 billion to $10 billion in cash this year, reaffirming its commitment to distribute at least 60% of free cash flow to investors.
“We understand that this is the best cash allocation for the company’s cash,” Chief Financial Officer Rodrigo Araujo told reporters.
(Reporting by Sabrina Valle by Nick Zieminski)
https://www.oedigital.com/news/498457-petrobras-leapfrogs-oil-majors-in-dividend-payouts-by-more-than-50 Petrobras leads oil giants by more than 50% in dividend payments