Brazil's Petrobras said Monday that it is cutting its crude-oil output projection for 2020 from 4.91 million to 4.2 million barrels per day as part of a move toward "realistic targets."

The state-controlled firm has fallen short of its production goals for the last eight years, CEO Maria das Graças Foster told investors at a gathering in Rio de Janeiro.

While the original plan called for output to reach 3.07 million bpd in 2015, the revised blueprint sets a target of 2.5 million bpd in 2016, she said.

"We have been working with business plans that impose audacious but inviable goals. Now we will work with more realistic targets," the head of Brazil's largest enterprise said.

Most of the $236.5 billion Petrobras plans to invest over the 2012-2016 period will go toward exploration, production and refining, Foster said.

She stressed, however, that the company's ambitious business plan is predicated on the assumption Brazil will end a policy of keeping domestic fuel prices below international levels.

The Brazilian government wants to hold down fuel prices to curb inflation, but the benefit for consumers comes at a significant cost to Petrobras, which has to import crude oil at international prices.

Petrobras' losses from the subsidy have climbed in recent months as a sharp rise in domestic consumption has forced the company to boost oil imports from around 500,000 bpd in early 2011 to 800,000 bpd last month.

The government announced last Friday a 7.83 percent increase in the retail price of gasoline and a 3.94 hike in diesel prices.

The increases are accompanied by corresponding cuts in taxes at the pump to cushion the impact on motorists.

The bump is not enough to close the gap with global prices and Petrobras shares were trading 5 percent lower on the Sao Paulo stock exchange Monday.

Petrobras' 2012-2016 plan envisions an international oil price of around $90 a barrel and an equalization of domestic and international prices.

If those assumptions hold up, the company can rely on operating revenues for $136 billion of its $236.5 in planned investment, Foster said, while a substantial deviation in either variable will force Petrobras to revise its strategy.

The blueprint earmarks $65.5 billion, or nearly 28 percent of total investment, for refining as part of a push to eliminate the need for imports of gasoline and diesel.

Half of the $141.8 billion destined for exploration and production will go toward exploitation of the deepwater pre-salt layer, which is estimated to contain billions of barrels of oil equivalent and could potentially transform Brazil into a major crude exporter. EFE