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Petroleo Brasileiro SA (Petrobras) has confirmed that its executive board has given the go-ahead to examine a possible initial public offering (IPO) for its wholly owned subsidiary Petrobras Distribuidora S.A. - or BR Distribuidora (BR) to be listed on the B3 (formerly BM&FBOVESPA) stock exchange's Novo Mercado (New Market) segment.

BR operates more than 7,000 service stations in Brazil and is the largest distributor and marketer of petroleum derivatives and biofuels in Latin America. The business is also responsible for the sale of marine lubricants as well as local maritime diesel fuel that is compliant with Brazil's National Petroleum Agency (NPA) specifications.

"We have already seen a considerable number of IPOs this year, and we think that market conditions are extremely favourable for considering this step," said president Pedro Parente, who took office in June 2016.

"We need to carefully examine this alternative," Parente added during the 19th International Meeting on Investor Relations and Capital Markets, in Sao Paulo, where the announcement was made.

Back in March, Petrobras's executive board said in a securities filing that it was looking at divesting five key assets, including BR Distribuidora.

The state-controlled energy company has gone back and forth on the sale of its fuel distribution unit over the past two years. It is aiming to reduce debt of around $100 billion by focusing on asset sales, slashing capital spending and cost reductions, and to move forward following its well-publicized corruption scandal.