The Brazilian government will boost its stake in Petrobras, Latin America’s largest company, to 55% from 39% now.
President Lula is seeking a greater role for the state before Presidential elections next month where his chosen successor Dilma Rousseff is in the lead.
The government is buying $43 billion worth of stock in return for the right to develop 5 billion barrels of reserves.
This is the biggest share sale this year.
Lula is strengthening control over the domestic oil industry after the Tupi discovery in 2007, the largest find in the Western Hemisphere since 1976. Lula says Brazil is relying on the country’s oil wealth to help raise the nation’s 192 million people out of poverty.
This has been termed ‘Reverse Privatisation’ by disgruntled foreign speculators.
Brazil is the world’s largest producer of orange juice and coffee.
Petrobras plans to spend $224 billion in the next years, of which $74 billion will be for refining and distribution.
Nick Robinson, manager of $25 billion fund in emerging markets (Aberdeen Asset Management) says: “most of the refineries are in the north and the current government gets most of its support from the north”.