NEW YORK (Bloomberg) -- Petroleo Brasileiro SA, Brazil’s state-controlled oil company, said it may increase its $8.6 billion planned spending on petrochemicals investments through 2012 as the company seeks to boost its refinery business.

Petrobras, as the company is known, may “revise upward” its 2008-2012 spending plan, Chief Executive Officer Jose Sergio Gabrielli said on Saturday in Sao Paulo. “We will continue growing in petrochemicals,” Gabrielli said. “We don’t want to be dominant, but we want to be important in petrochemicals.”
Petrobras is expanding petrochemicals and refining to increase returns on its expanding output of oil and natural gas. Offshore exploration yielded the Western Hemisphere’s biggest discovery in three decades when Petrobras discovered the Tupi field in 2006, containing as much as 8 billion barrels of oil.
The company is moving ahead with development of the offshore fields, where production is still viable at current oil prices, Gabrielli said. Output costs in the so-called pre-salt offshore area are below $40 per barrel, Gabrielli said.
Petrobras uses $35 per oil barrel as a reference price in its investment plan. This plan is being reviewed, Gabrielli said, without giving further details.
“We need to have a reference price, but the market price is hard to predict,” he said. The reference price is used for medium and long term decisions, Gabrielli said.
--------------Cash for investment
Brazil’s government may raise its stake in Petrobras to help the company increase cash for investment, Paula Kovarsky, analyst at Banco Itau SA, said in a note to investors on Saturday.
The government plans to send Congress a new petroleum bill in 2009 that will give Petrobras unleased oil concessions in exchange for stock, Agencia Folha news service reported on Friday, citing comments by Dilma Rousseff, President Luiz Inacio Lula da Silva’s chief of staff, during meetings with Petrobras union leaders.
Oil futures traded in New York have dropped 72 percent since reaching a record $147.27 a barrel on July 11. Futures earlier on Saturday touched $40.50, the lowest since Dec. 13, 2004.
Gabrielli, talking to reporters in Sao Paulo on Saturday, said he would not comment on this subject. He also denied he made any comments to Agencia Folha on Friday.
Still, Petrobras said it can’t guarantee an increase in the supply of petrochemical raw materials such as natural gas and naphtha because offshore gas resources are so far from the coast that the company has yet to determine how it will transport the fuel to market, he said.
“We don’t have enough information to know the volumes of gas production in the pre-salt area,” Gabrielli said.
Petrobras fell 2.4 percent to 18.16 reais in Sao Paulo trading.