Brazil oil giant Petrobras, whose troubles have hit Keppel and Sembcorp, to axe staff: Sources

The headquarters of Brazil's state-owned oil company Petrobras in the centre of Rio de Janeiro.
The headquarters of Brazil's state-owned oil company Petrobras in the centre of Rio de Janeiro.PHOTO: AFP

RIO DE JANEIRO (REUTERS) - Brazil's Petrobras will announce job cuts on Thursday (Jan 28), two sources told Reuters on Wednesday, with one saying 30 per cent of managerial staff could be axed, as the state-run oil company battles to cut costs in the face of a crash in oil price and a corruption scandal.

Petroleo Brasileiro, as the company is formally known, earlier on Wednesday invited reporters to a press conference on Thursday but did not say what it would be about.

"The idea is to cut about 30 per cent of management. So many managers is an expense which imprisons the firm," said a senior company source who asked to remain anonymous as the information is not yet public.

Petrobras is in the midst of curbing investments and trying to sell assets as it tries to pay down its massive debt load and adjust to a lower oil price. Brent crude closed at US$33.10 a barrel on Wednesday, about a third of its price in 2014.

"The job is to adapt the size of the company to be more in line with the reality of the market... The cuts could be bad for people but is good for the health of the company," said a second company source who also asked for anonymity.

A study into streamlining Petrobras began last year, but was accelerated due to the continuing deterioration of the company's finances. Earlier this month the company cut its five-year spending plan for the third time in just over six months, reducing it by a quarter to US$98.4 billion.

Petrobras' troubles have spilled over into Singapore. Oil rig builders Keppel Corporation and Sembcorp Marine are facing potential default by their biggest customer, rig leasing company Sete Brazil whose only client is Petrobras.

Sete has been unable to get financing from banks since becoming embroiled in a corruption probe involving Petrobras.

It has not paid Keppel and Sembcorp Marine since November 2014, putting at risk US$10.5 billion of orders placed with the two companies. Sete ordered six semisubmersibles from Keppel and seven drillships from Sembcorp Marine in 2011 and 2012, about 40 per cent of the two companies' orderbooks, according to analysts.

Last week Keppel announced a S$230 million writedown in the fourth quarter on projects for Sete, which is now deciding whether to file for bankruptcy protection.