RIO DE JANEIRO: Brazilian state oil company Petrobras will sell up to $64.5 billion in new stock — one of the largest in capital markets history — to raise funds for the world’s biggest oil exploration investment plan.

The company will offer 1.59 billion new preferred shares  and 2.17 billion new common shares, Petrobras said in a statement published in Valor Economico newspaper, for an operation that includes a $43 billion state-backed oil-for-shares swap.

At on Thursday’s closing price for the stocks, the company would raise 67.8 billion reais ($39.2 billion) from the sale of common shares and another 43.8 billion reais ($25.4 billion) from the preferred shares, making it one of the world’s largest-ever stock offerings.

Petrobras expects to begin bookbuilding Sept.3, and price the share sale on Sept.23.

The plan has become the financial cornerstone of the company’s $224 billion five-year investment plan meant to turn Brazil into a major oil exporter by tapping oil buried deep under the ocean floor in a region known as the subsalt.

The company faces skepticism by investors who have questioned the high price for the oil reserves to be used in the state-backed oil-for-shares swap arrangement, which has sparked fears Petrobras may be overpaying for the assets and diluting shares.

Under the terms of the $43 billion oil-for-shares swap, Petrobras said on Wednesday  it agreed to exchange part of the stock to be issued for development rights to 5 billion barrels of offshore oil at a price of $8.51 per barrel — far above the $5 to $6 per barrel that markets saw as fair.

The swap will endow Petrobras’ assets with valuable oil reserves.

The segment of the share sale outside the oil-for-share swap is primarily targeted at non-government and minority shareholders, who will will provide the only cash in the operation.

Their participation will be crucial for Petrobras to shore up its balance sheet, which has been stretched by heavy borrowing to finance its ambitious offshore plans.

Government leaders have also said they plan to boost the state’s participation in the company’s capital to around 40 per cent current levels near 30 per cent, which has left some investors nervous about greater state sway in the company.