Petrobras expected to cut investment, output in 2017-21 plan

Brazil’s heavily indebted state-led oil company Petrobras will likely cut planned investment by about a sixth and its 2020 output goal by 14 percent under a five-year strategic plan scheduled for release Tuesday before markets open, according to analysts.

Petroleo Brasileiro SA, as the company is formally known, is expected to announce a 2017-2021 capital budget of $82.7 billion, or an average of $16.6 billion a year, according to the average estimate of eight analysts surveyed by Reuters.

That would be Petrobras’ smallest five-year capital budget since 2006 and 16 percent less than the Rio de Janeiro-based company’s 2015-2019 plan revised in January.

The cuts would be part of Chief Executive Officer Pedro Parente’s fight to curb the company’s nearly $125 billion of debt, the largest of any company in the global oil industry, and focus spending on crude oil exploration and production needed to pay for it.

Parente’s efforts are complicated by oil prices at some of their lowest levels in a decade, a corruption scandal that has undermined investor confidence and huge losses on money-losing refineries and domestic fuel subsidies.

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