Petrobras cuts spending by more than 30% for 2019

Brazilian oil giant Petrobras has announced that it will cut spending by more than 30 percent. The company now plans to spend $10 billion-$11 billion in 2019 as it makes adjustments to the way it accounts for field unitisation, adapts to a weaker exchange rate against the dollar and delays drilling activities.
The oil refiner was expected to spend $16 billion under the company’s $84 billion investment program for 2019-2023.
After the company’s first-quarter spending was below expectations, Chief Executive Roberto Castello Branco pledged to improve guidance on investment spending.
Roberto Castello Branco told the media that, “The guidance doesn’t include investments in auction blocks or signing bonus payments. I would expect that the final total will be a little higher than $10 -$11 billion.”
The company has already exercised its right to hold at least a 30 percent stake in the Aram, Norte de Brava, and Sudoeste de Sagitario areas. The company has earlier revealed that these areas will be sold in Brazil’s 6th subsalt production-sharing auction in November.
According to Petrobras’ Chief Financial Officer Andrea Almeida, the biggest cuts came from delays related to exploration and development, from which $447 million was removed.
He noted that, “Planned maintenance shutdowns at floating production, storage and offloading vessels (FPSOs) and refineries, as well as natural gas pipeline reconnections after inspections, also contributed to the spending cuts.”
Brazil’s oil giant Petrobras posted a 350 percent increase in net profits to $4.8 billion in the second quarter this year. However, net income plunged 57 percent year-on-year to $1.3 billion from $3 billion.
Earlier in April, the oil giant sold its share in its natural gas pipeline unit to France’s Engie for $8.6 billion. In July, it also sold a majority stake in its fuel distribution unit, BR Distribuidora, for $2.3 billion.