SAO PAULO: Lower oil prices contributed to a $1.48bn cut in third-quarter profits for Petrobras, the Brazilian state-controlled energy company said.

Petrobras saw July-September profits slide to 7.3bn reais ($4.2bn) from 9.8bn reais ($5.7bn) for the same period last year, it said.

It blamed lower oil prices in the wake of the global financial crisis, as well as an extraordinary late payment it had to make for its participation in an offshore Brazilian oil field.

The profit slump came despite a slightly higher margin in oil output to 1.9 million barrels per day, five percent more than for the third quarter last year, and a four percent decrease in the cost of extraction, Petrobras said.

“The price of oil continues to recover and has maintained this trend since the first quarter,” Petrobras Chief Financial Officer Almir Barbassa said during a press conference to discuss the company’s third-quarter earnings.

Petrobras benefited from a tightening of the spread between North Sea Brent crude, which Petrobras uses as a benchmark, and the heavy oil the company exports. The spread fell to a record low of $4.28 a barrel in the quarter, Barbassa said.

“There is firm demand in the world for heavy oil,” Barbassa added, noting that there has been a global reduction in the supply of heavy crude grades. That’s because production cuts in the Mideast have centered on heavy oil output, not the higher-value light-sweet crude.

Increased oil production in the third quarter also boosted export volumes to an average of about 724,000 barrels a day, compounding benefits from the tighter spread, the finance chief said.

The exports gave Petrobras enough momentum to once-again avoid the high double-digit year-on-year net profit declines posted by other oil majors such as Exxon Mobil Corporation, Chevron Corporation and Royal Dutch Shell PLC.

Petrobras’ third-quarter figures would have been even better but for a 1.3bn reais nonrecurring charge after the company settled a dispute over special-participation tax for output from the Marlim field with the country’s National Petroleum Agency, or ANP, Barbassa noted. “That’s a very good result when you keep in mind that the price of Brent had a decrease of 41 percent between the third quarter 2008 and the third quarter 2009,” Barbassa said.