Petrobras cuts spending again but protects E&PCompany News // January 13, 2016
Petrobras, Brazil's state oil company, is to slash spending once again as it struggles with the so-called 'Car Wash'# scandal and the effect of the steep decline in oil prices.
On 12 January Petrobras announced that it was cutting its investment plan for the third time in around six months.
The latest cuts see Petrobras cutting its 2015-2019 capital spending budget by a quarter to US$98.4 billion from US$130 billion. Investment in 2016 will be US$20 billion, compared with US$27 billion as announced in June 2015.
Petrobras also said it would produce less oil this year and has cut its prediction by 2 per cent to 2.145 million barrels per day from 2.185 million bpd.
The company said its new planned capex is $98.4 billion, with US$80 billion (around 81 per cent) going toward exploration and production activities. The good news therefore, such as it is, is that investment in exploration and production does not seem to have been cut and will actually increase a little. The state oil company said it wants to maintain E&P projects as a priority.
The latest rounds of cuts are based on an oil price which already looks outdated, with the price around US$30/barrel and expected to head further south.