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Petrobras cuts spending

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Oilfield Technology,

As a result of the sharp decrease in oil and fuel prices and demand and the Covid-19 pandemic, Petrobras is taking a series of measures to reduce disbursements and preserve liquidity.

The measures include:

  • Reduction of planned investments for 2020 from US$12 billion to US$8.5 billion (being U$7 billion in cash view), mainly due to postponements of exploratory activities, interconnection of wells and construction of production and refining facilities, and of the devaluation of the Real against the US dollar.
  • Speeding-up reduction of operating expenses, with an additional decrease of US$2 billion, highlighting:
  • - Mothballing of the platforms in operation in shallow water fields, with higher lifting cost per barrel, which due to the fall in oil prices started to have negative cash flow. The current oil production of these fields is 23 000 bpd and the divestments in these assets are still in progress.
    - Lower costs with well interventions and optimisation of production logistics.
    - Postponement of new material contracts for a period of 90 days.

As a result of the implementation of the measures described, the company estimates that it will balance its cash flow in 2020.

Regarding oil and oil products sales, Petrobras is continuously monitoring the internal and external markets, as well as managing inventories and oil refining at its refineries, in line with the variations in market demands. The Covid-19 crisis has led to significant reductions in the demand for oil products, especially diesel, gasoline, and jet fuel in Brazil and worldwide.

Therefore, the company has decided to reduce a total of 100 000 bpd of its oil production by the end of March, due to the oversupply of this product in the foreign market and the reduction of global demand for oil caused by the effect of Covid-19. The company will evaluate the market conditions and, if necessary, make new adjustments in oil production.

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