Petróleo Brasileiro S.A. (NYSE: PBR), or Petrobras, is supposed to be a great oil giant, with vase proven and probable reserves, and with a vast opportunity in Brazil. The problem is that nothing seems to go right for the Petrobras shareholders. If the market — and the company’s overseers — do not cooperate immediately, Petrobras shares could soon break under the $10 per share handle in New York trading.

One thing that Petrobras cannot control is how the market treats its peers. Shares of Exxon Mobil Corp. (NYSE: XOM), Chevron Corp. (NYSE: CVX) and now even BP PLC (NYSE: BP) have all fallen ahead of and after earnings. The market does not even seem to care that Exxon Mobil is now back at the same price as when Warren Buffett started buying up the stock.

What Petrobras is really at fault over, from the investor angle, is that the company’s management really cannot take much control of its own destiny for shareholders. Some might even say that Petrobras is held hostage to rather than at fault over. Either way, Petrobras is highly regulated, and the company’s employees are a major shareholder group. That puts wages ahead of shareholder profits — good for employees, but often bad for shareholders. Then the Brazilian government gets to set or heavily influence prices for what Petrobras can charge per barrel of oil. This keeps oil prices low for Brazilians, but it keeps Brazil from selling oil at an at-market rate.

Many outsiders also believe that other regulation of Petrobras has been greater than that put on most other international oil giants. Unfortunately, the woes of BP in its Gulf of Mexico disaster may have carried over on tighter operating and exploration restrictions on Petrobras. That remains up for argument, but almost all oil and gas investors would certainly agree that the BP disaster was far from a positive development for companies who want to profit from deepwater drilling.

Where the story gets murky is that Petrobras trades very cheap to peers. Its existing price-to-earnings (P/E) ratio is close to six times earnings. Exxon Mobil trades at about 11 times earnings, and Chevron trades at closer to 10 times earnings.

U.S. investors are not buying into Petrobras for dividends either. Exxon Mobil yields 2.7% and Chevron yields closer to 3.5%. Petrobras has preferred shares as well, which make the capital structure for the ADRs that much more complicated.

Petrobras has raised billions and billions of dollars in the past few years, and it is literally sitting on top of some of the best offshore reserves in the world.

Petrobras also hardly has investment grade ratings, according to the company’s own investor site.

There are also political risks in Brazil that are heading the wrong way for those outside of Brazil who want to invest in the growth of the country. These may be deemed good for employees and the public in Brazil, but social change like this is rarely good for outside investors looking to put capital to work. While Exxon, BP and Chevron all operate in places that are not exactly the safest to operate nor the safest to directly invest in, they are all large enough that investors are more comfortable with their diversified profiles over Petrobras.

These are some of the ongoing risks for Petrobras. Again, the company could be one of the top oil companies for investors to seek out in the world. That just is not likely going to be the case for investors under the current trends in Brazil nor under the current governance of Petrobras. Its vast reserves make it a valuable asset on paper, but having its hands tied makes that balance sheet and proven reserves analysis less important.

Petrobras shares have traded in a range of $10.75 to $19.65 over the past year, and shares are only at $10.92 in early Tuesday trading. It seems too painful to think that Petrobras stock could sink under $10. That huge 2.9 billion share sale that went off at $34.49 in 2010 now seems like it was in a different time — and world — entirely.

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