TN PETRÓLEO

Brazil's government-run oil company Petrobras said Monday the second quarter of 2008 was its most profitable ever, thanks to higher oil prices, increased production and reduced operating costs.


Petroleo Brasileiro SA said second-quarter net income rose by 29 percent over the same quarter in 2007 and by 44 percent for the first half of the year over the same period in 2007.


The Rio de Janeiro-based company reported profits of 8.78 billion reals ($5.48 billion), or 1 real ($0.62) per share, in the second quarter of 2008, compared to 6.8 billion reals ($4.25 billion), or 0.78 reals ($0.48) per share, for the second quarter of 2007.


Earnings were in line with the predictions of analysts, many of whom had expected the company to announce record profits mainly due to rising oil and fuel prices.


"It is with great pleasure that I present the biggest net quarterly profit in the history of the company," Petrobras president Sergio Gabrielli said in a statement.


The company said net profits for January through June of 2008 reached 15.7 billion reals ($9.8 billion), making it also the company's most-profitable first half ever.


Petrobras said the increased profit was due both to prices on international markets as well as a 10 percent increase in gasoline prices and a 15 percent increase in diesel prices in May inside Brazil, the first price hike since September 2005.


Petrobras is Brazil's largest company in terms of market value, but the government holds a controlling stake and had kept a cap on prices to tamp down inflationary pressures.


The company said oil and gas production had risen to 2.18 million barrels a day during the second quarter of 2008 _ up from 2.05 million barrels a day during the same period in 2007.


Meanwhile, the company said it was able to cut operating costs by about 3 percent during the quarter.


The company said the increased profit was also due to a reduction of extraordinary expenses with its pension plan incurred in 2007.


In recent months, Petrobras also has benefited from the discovery of several new deep-water oil reserves but their exact magnitude has not yet been determined.


Petrobras announced its second-quarter earnings Monday after the markets closed. New York-traded shares fell 3.17 percent, or $1.62, to $49.44.