San Francisco: Petrobras announced on Monday it will cut its five-year investment budget to $130bn as it tries to adjust to the new realities of the oil industry while also trying to stabilise its own reputation after the corruption scandal of the past year.
Brazil’s state-run oil company, formally known as Petroleo Brazileiro SA, said the new figure represents a 37% cut to its planned capital spending over the period 2015-2019.
It is lowering its oil output targets and hopes to reduce its huge debt load of $125bn despite operating in a time of slumping prices.
The company will focus more on exploration and production, less on refineries. And it hopes to salvage $42.6 billion in divestments and restructuring in 2017-2018.
Petrobras’ problems arose from several areas: over reach in some of its ambitious drilling projects and refinery construction; government-imposed requirements to subsidize domestic prices and for Petrobras to have 30% stake in every new “pre salt” oil field; and the corruption scandal in which some of its executives colluded with contractors to inflate bid prices, costing the company $19bn in write offs in 2014.