BRASILIA -(Dow Jones)- Brazilian state-run energy giant Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras, will maintain its investment plans in Argentina, but the company's focus is on developing recently discovered ultra-deepwater fields found off Brazil's coast, Chief Executive Maria das Gracas Foster said Wednesday. Foster joined Mines and Energy Minister Edison Lobao last week in a meeting with Argentine Planning Minister Julio de Vido, where the officials discussed the decision by Argentina's Neuquen province to revoke a Petrobras concession there. Petrobras fulfilled all of its exploration obligations under the contract and should not have had the concession taken away, Foster said during testimony before a Lower House committee. "I see the Argentine minister's request for increased investments as legitimate, and Petrobras will announce something at the right time," Foster said. "But we shouldn't put all of our eggs in one basket. Petrobras's priority is the pre-salt." Despite the recent row, Petrobras is interested in continuing its operations in Argentina, Foster added. The company has asked Argentina to protect its assets in the country to avoid a similar situation as Spain's Repsol and will maintain its investments at about $500 million per year as defined in the company's 2011-2014 investment plan, the executive added. Repsol is fighting the Argentine government's attempt to expropriate a 51% stake in national oil company YPF. While Foster declined to comment directly about the YPF case, she did highlight the differences between Brazil and Argentina in her remarks. "We don't rip up contracts like what happens in other countries," Foster said. "It's safe to invest in oil and energy in Brazil." The executive also said once again that Petrobras would need to raise domestic gasoline and diesel prices should Brent crude, which the company uses as its reference oil price, remains at elevated levels. Petrobras is working with a Brent price of about $119 a barrel, but some market forecasts have pegged Brent prices to climb to about $130 a barrel, Foster said. "It would be impossible to not raise fuel prices should Brent grow by the proportions of some estimates," the executive said. Petrobras is also studying the impact of higher operating costs, which could also play in any decision to raise domestic fuel prices, Foster said. "I don't see how I can say that I won't increase fuel prices, because I have bills to pay," Foster said. Petrobras, however, has not yet reached the point when a price increase for fuels is inevitable. "Now is not the time," Foster told reporters after her testimony. "We haven't yet arrived at a choke point." Foster also called for the percentage of ethanol blended with gasoline at the pump to be raised back up to 25% from the current 20%. Brazil reduced the ethanol blend last year when a shortage of the sugar cane-based biofuel caused ethanol prices, and therefore gasoline prices, to soar. "Ethanol has to return to being everything that it was previously, because if it's one thing that we know how to do it's ethanol," Foster said. Brazil is the world's largest producer of sugar-cane ethanol, and most new light vehicles are sold with motors that can operate on any combination of gasoline and ethanol. -By Jeff Fick, Dow Jones Newswires; 55-21-2586-6085; jeff.fick@dowjones.com
