(Adds quote, July board meeting and background)
SAO PAULO, June 22 (Reuters) - Petróleo Brasileiro SA is reviving an initial public offering of fuel distribution unit BR Distribuidora to cut the Brazilian state-controlled oil company's debt and investment in low-return activities, Chief Executive Officer Pedro Parente said on Thursday.
Pedro Parente said at an event in São Paulo that a proposal would be delivered for board approval as soon as next month. While terms of the deal remain under analysis, he said an initial public offering would create "more value" for Petrobras, as the oil firm is known.
In a statement, Petrobras said the unit IPO will consist of existing shares, in a mechanism known as a secondary offer. Parente did not specify terms or a timetable for the IPO, but if the board approves the plan in July, it could be priced as early as October, based on standard IPO calendars in Brazil.
"We see market conditions that are extremely favorable, with investors willing to pay high valuations to encourage good companies to list their shares," Parente said.
Petrobras is increasingly relying on cost reductions, asset sales, spinoffs and capital-spending cuts to trim debt of about $100 billion and turn the page on a massive corruption scandal.
Rio de Janeiro-based Petrobras has gone back and forth on plans to spin off or list BR Distribuidora over the past two years, backing off in part due to legal and operational challenges and investor skepticism.
BR Distribuidora, which controls Brazil's largest gasoline, ethanol and diesel-station network, was valued at around $10 billion by UBS Securities analysts two years ago.
Earlier this year, Petrobras unveiled a two-year, $21 billion asset sale and partnership program.
During the event, Parente said improving operational profitability in the face of low oil prices highlights how recent cost-cutting efforts have bolstered the finances of the state behemoth. (Reporting by Lais Martins; Additional reporting and writing by Alexandra Alper and Guillermo Parra-Bernal; Editing by Dan Grebler and Richard Chang)