International News: Brazil's Petrobras Becomes World's Third Largest Oil Company

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International News: Brazil's Petrobras Becomes World's Third Largest Oil Company

09/28/2010

SAO PAULO, Brazil -- Brazil's state-run Petrobras became the world's third-biggest oil firm by market capitalization Monday as it completed a record share issue expected to bring in around $70 billion, according to the international news service, AFP.

The offering, made on the New York Stock Exchange last Friday and on the Sao Paulo stock exchange Monday, has made Petrobras the third largest oil company in the world after U.S.-based ExxonMobil and PetroChina.

Petrobras also operates the second largest number of convenience stores in Brazil, after Ipiranga.

The company's shares rose 1.93 percent to 30.23 reals by the end of trading -- higher than the 29.65 reals the new shares were priced at for trading, showing strong demand, according to AFP.

Petrobras said it will use the proceeds from the share sale to explore the country's offshore oil fields, which are so big they could make Brazil a major exporter. It plans to boost capital expenditure over the next five years to $224 billion to exploit the fresh reserves, according to AFP, and estimates the so-called subsalt fields could more than triple its existing proven oil reserves of 14 billion barrels.

There is also speculation that the market capitalization will accelerate expansion to other countries, including possibly the United States. Petrobras already operates in other Latin American countries, including Chile.