Petrobras: coming up for air Brazil's national oil and gas champion needs and deserves more operational freedom When Peru's energy minister was looking for a "world class" model to use as a benchmark for the soon-to-be-privatised Petroperu, the national oil company, he looked to Colombia, not Brazil. That is hardly surprising. Since a small stake was floated in 2007, shares in Ecopetrol, Colombia's national oil company, have outperformed those of Petrobras, its Brazilian equivalent, by 200 per cent. These have been dreary years for those who view Latin America's energy markets through a Petrobras lens. Half the world's oil companies (give or take) seem to have a stake in its "pre-salt" fields, and Petrobras produces 95 per cent of Brazil's oil and gas. But it has missed production targets for years: it is likely to produce 4.2m barrels a day by 2020 rather than the nearly 5m being chased as recently as two years ago. Petrobras is overstretched. True, its 2013-17 business plan is more realistic than earlier ones, and the recent auction of the Libra oilfield attracted some foreign attention. But the company's $237bn of capital expenditure planned to 2017 still looks too ambitious. Petrobras will need more help to develop Brazil's huge resources than the government seems prepared to grant. That is a pity - and counter-productive, too, given the company's role as the driver of Brazilian development. Petrobras is also not helping itself. Instead of selling some capex-hungry assets, it is selling cash-generating ones. Its recent $2.6bn disposal in Peru is an example. Reducing capex would ease its operational challenges and reduce net debt, which is 2.5 times earnings before interest, tax, depreciation and amortisation. Oil and gas is central to Brazil's growth story; Petrobras is central to the oil and gas story. If it enjoyed greater operational freedom of manoeuvre, there is no reason why it should not eventually become Latin America's energy benchmark.