Petrobras bids to regain financial strength
Petrobras bids to regain financial strength
Investments from 2017 to 2021 are projected at $74.1 billion, the company said, a quarter less than in the previous five-year plan.
“In the next couple years, we will concentrate on recovering Petrobras’s financial strength,” new CEO Pedro Parente said in a statement.
“In the total five-year horizon this plan encompasses, we propose that the company will have been restructured, that it have unquestionable governance and ethical standards.”
The new business plan is the first released under Parente, who was appointed by new center-right President Michel Temer in June to take over the troubled company.
Petrobras has been at the eye of a corruption storm upending Brazilian politics.
Corrupt executives allegedly colluded with construction firms to fleece the company of billions of dollars on contracts for big projects.
Investigators say much of the dirty cash went to politicians and political parties who helped orchestrate the scheme.
The scandal contributed to the downfall of leftist president Dilma Rousseff, who was suspended in May and convicted in an impeachment trial last month on unrelated charges of fudging the government’s budget.
The scandal is also a threat to Temer, who has had several key allies implicated.
Petrobras has simultaneously been battered by the plunge in global oil prices from more than $100 a barrel in mid-2014 to around $45 today.
The new five-year plan includes an 11-percent cut to operating costs. It also targets an “intense pace” of sell-offs and joint ventures for less-lucrative oil fields, expected to bring in $19.5 billion in the next two years.
Petrobras began the sell-offs in July when it announced the $2.5-billion sale of a “pre-salt” field to Norway’s Statoil.
It was the first time Petrobras agreed to sell a pre-salt field — massive deep-water oil deposits that are the company’s crown jewels but are expensive and technically difficult to reach.
The company also said it plans to continue voluntary severance packages that will reduce its payroll by 9,200 workers this year and an estimated 9,700 next year.
The announcement comes as it faces a potential strike by workers furious over a pay freeze.
Petrobras ended 2015 with losses of $9.6 billion — its second year in the red, and worst performance since its founding in 1953.
It returned to the black in the second quarter this year, posting profits of $106 million.
But Petrobras, the largest company in Brazil, has become a symbol of the decline of Latin America’s largest economy.
After posting strong economic growth during a commodities boom in the 2000s, Brazil is now mired in its worst recession in decades.
Its economy is set to contract 3.3 percent this year, before returning to meager growth of 0.5 percent next year, the International Monetary Fund forecast in July.
Saudi Aramco has spare capacity to meet any supply disruption says CEO
- Space capacity of 2 million barrels
- Aramco chief in Delhi to sign ADNOC deal
Oil giant Saudi Aramco has spare capacity of 2 million barrels per day (bpd) and can meet additional oil demand in case of any interruption in supplies, the company head said on Monday, days after OPEC agreed a modest increase in oil output from July.
Aramco, the world’s third-largest crude oil producer, is producing about 10 million bpd and has the capacity to produce 12 million bpd, Amin Nasser, the company’s chief executive, said on the sidelines of a conference in New Delhi.
OPEC and non-OPEC producers including Russia agreed over the last few days on a modest increase in oil production from July, following calls from major consumers to curb rising fuel costs.
“We have a healthy spare capacity ... that will be availed to meet additional demand and any interruptions in supply if it happens,” Nasser said.
Nasser expects OPEC’s decision to be implemented “very soon,” although he did not comment on Aramco’s likely output for the July-August period.
“Whatever is concluded as part of this agreement, we will fulfil,” he said.
OPEC and it’s non-OPEC allies met last week to review a pact to cut their combined output by 1.8 million bpd that was put into place at the beginning of 2017.
Saudi Energy Minister Khalid Al-Falih said at the weekend OPEC and non-OPEC combined would pump roughly an extra 1 million bpd in coming months, equal to 1 percent of global supply.
Global consumers have grown increasingly worried over the past few months about oil supplies, with the United States vowing to renew sanctions against Iran, and Venezuela seeing a big drop in its output due to US sanctions and an economic crisis.
Nasser was in Delhi to sign a deal allowing the UAE’s’ Abu Dhabi National Oil Company to acquire a stake in a planned $44 billion refinery and petrochemical project on India’s west coast.
Nasser said the company’s is “almost there” in finalizing the stake to be given to ADNOC.
Saudi Aramco is looking at “all options” to enter fuel retailing in India through partnerships with Indian oil companies and ADNOC, Nasser said.
Aramco wants to be present in the entire value chain of India’s energy sector, he said.
India has seen mass local protests against the proposal to set up the refinery in the Ratnagiri region of the western state of Maharashtra, but Nasser said he expects India to resolve the land acquisition issues.
“We are assured by our Indian partners ... that this is being worked out,” he said.
India is emerging as a key demand center for refined fuels. To meet its growing demand, the South Asian nation aims to raise its refining capacity by 77 percent to 8.8 million bpd by 2030.
Nasser also said the oil markets are healthy and demand forecasts look healthy for 2019.
Reacting to media reports that China’s Sinopec has reduced oil purchases from the Kingdom, Nasser said: “Sinopec is our major customer, sometimes they buy less, sometimes they request for more. We have some Chinese refiners approaching us directly for oil purchases, and that’s kept our sales to China at a healthy level.”