© Reuters. FILE PHOTO: The logo of Brazil’s state-run Petrobras oil company is seen on a fuel tank at the Petrobras Paulinia refinery in Paulinia, Brazil, July 1, 2017. REUTERS/Paulo Whitaker
(Reuters) – Brazil’s state oil company Petrobras paid at least double the dividend of the largest international oil producer in the second quarter, adding to the government’s coffers during a tense presidential campaign.
The five largest oil producers in the West— Exxon Mobil Corporation (NYSE: ), Chevron Corp. (NYSE: ), Shell (LON:) PLC, TotalEnergies and BP (NYSE: ) – have made record cash distributions to shareholders in recent days of between $4-7.6 billion. But none came close to Petrobras’ $17 billion spending.
Brazil’s government last month asked Petrobras and other state-controlled companies to increase dividends to fund additional federal spending.
When President Jair Bolsonaro’s government, who faces a tough re-election bid later this year, bypassed constitutional spending caps last month to fund a massive cash-transfer program popular with low-income voters , issued a cry for help.
Petrobras will distribute profits to shareholders about 60 percent more than its $10.5 billion (54.33 billion reais) profit. Critics say the huge spending will lead to underinvestment in the business.
Petrobras’ dividend is lower than Saudi Arabia’s state-controlled Saudi Aramco (TADAWUL:), the world’s largest oil company, produces 13 million barrels of oil equivalent (boed) per day, almost five times that of Petrobras.
Saudi Aramco distributes $18.76 billion to shareholders on a quarterly basis. Its next dividend will be disclosed on August 14.
U.S. producer Exxon Mobil posted the highest quarterly profit of the five companies, spending $7.6 billion on shareholder distributions.
Critics say Bolsonaro is trying to boost his re-election chances by imposing short-term spending measures. Polls show him trailing leftist former president Luiz Inacio Lula da Silva. Petrobras will pay the dividend ahead of the first round of voting scheduled for October 2.
In a webcast last week, Petrobras executives said the special dividend payment would not affect the company’s investment plans. Petrobras expects to retain $800 million to $10 billion in cash this year and reiterated its commitment to distribute at least 60% of its free cash flow to investors.
“As far as we know, this is the best cash allocation for the company’s cash,” Chief Financial Officer Rodrigo Araujo told reporters.