State-led Petróleo Brasileiro SA , struggling with the biggest debt load among global oil firms, on Monday cut $11 billion from capital spending plans for this year and next as Brazil’s currency and oil prices slump.
Petrobras, as the company is commonly known, plans to cut 2015 investment by 11 percent to $25 billion from the previous $28 billion, according to a statement. Investment for 2016 will be cut 30 percent to $19 billion from $27 billion. Budgeted costs plus operating expenses excluding purchases of raw materials were also trimmed for this year and next.
The company is being battered by a whirlwind of bad news. In the last year, oil prices dropped nearly 50 percent and Brazil’s currency, the real, slipped by a third against the U.S. dollar, causing revenue to fall and debt to soar.
Meanwhile, the downgrade of its debt rating to junk status has raised the cost of borrowing, and a giant corruption scandal has tarnished its reputation with investors.
Leave a Reply