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Petrobras Cuts Capex, Oil Output Amid Market Turmoil  | Rigzone

Petrobras Cuts Capex, Oil Output Amid Market Turmoil  | Rigzone

As a result of the sharp decrease in oil and gas prices and demand, Brazil’s oil giant Petrobras has taken measures to reduce disbursements and preserve its liquidity. Some of the steps include:

•    Disbursement of revolving credit lines totaling US$8 billion and the disbursement of two new lines amounting to R$3.5 billion

•    Postponing the R$1.7 billion dividend payment announced on Feb. 19 to Dec. 15, 2020

•    Reduction and postponement of spending on human resources, totaling R$2.4 billion

•    Postponing 2019 performance bonuses, overtime payments and vacation bonus payments

•    Postponing the payment of 30% of the total monthly salary of the CEO, chief officers, executive managers and general managers; cancelling level advancement and promotion processes for employees and management level advancement in 2020

•    A 50% reduction in the number of employees on partial on-call in the next three months and temporary suspension of all training

The company has also reduced planned investments for 2020 from $12 billion to $8.5 billion by delaying exploratory activities, well connections and the construction of production and refining facilities. It has also accelerated the reduction of operating expenses by an additional $2 billion by mothballing operating platforms in shallow water fields that started to have negative cash flow. The current oil production of these fields is 23 thousand bpd and the divestments in these assets are still underway.

Finally, Petrobras elected to reduce a total of 100,000 bpd of its oil production by the end of March, due to oversupply in the market and the reduction of global demand for oil.

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