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Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) Looks To Fuel its Thermoelectric Plant Located in Brazil

Boston, MA 08/20/2014 (wallstreetpr) – According to reports, Petroleo Brasileiro Petrobras SA (ADR)(NYSE:PBR) and YPFB; a Bolivian state-owned gas and oil company agreed to continue the natural gas supply to a Brazilian thermoelectric power plant till December 31, 2016.

What’s the current status:

YPFB supplies 2.24 million cubic feet of natural gas on a daily basis to the thermoelectric plant that is located in Cuiaba; Brazil’s center west city. The supply is done under a contract that is set to expire on August 31. As PBR and YPFB have decided to continue the supply for more than two years’ time, hence it PBR will get the extra time to compensate from drought-stricken hydroelectric power plants.

PBR is a vertically integrated gas and oil company that operates in both downstream and upstream segments of the industry. It is one of the largest companies in Latin America in terms of revenues generated through sales on an annual basis. Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) covers a large part in the various operations of Brazilian gas and oil industry. It was able to produce as much as 1,931.4 thousand barrels oil per day that was almost 90.9% of total oil production of Brazil. After the continuous good performance, Forbs has decided to estimate it at $21/share which is almost ten times of its 2014 diluted EPS estimate of $2.1.

All the hydroelectric power plants in Brazil fulfill the national demand of electricity with installed capacity of 85.7 Giga Watts. It is 68% of the total power generation capacity of the country. Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) has a limited scope in terms of electricity supply to the grid. Although the demand of thermoelectric power is largely dependent on weather conditions in Brazil as demand varies in accordance with annual rainfall levels. When it rains heavily in Brazil, hydroelectric power plants generate enough power, so there is no need to use the backup of thermoelectric power plants, while the situation is changed in case of no rain or less rain.

Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.

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