Petrobras to draft plan for new investments, cost-cutting

Mr Pedro Parente, chief executive of Brazil's state-run oil company Petroleo Brasileiro, at his inauguration ceremony in Rio de Janeiro.
Mr Pedro Parente, chief executive of Brazil's state-run oil company Petroleo Brasileiro, at his inauguration ceremony in Rio de Janeiro.PHOTO: REUTERS

RIO DE JANEIRO (Reuters) - Mr Pedro Parente, the new chief executive of state-led Petroleo Brasileiro, will meet his top executives in early July to draft a new investment plan for the world's most-indebted oil company, a company source told Reuters on Wednesday (June 22).

The two days of meetings starting July 1 will be the first high-level planning session for Parente and his leading lieutenants since the CEO took over Petrobras, as Brazil's largest company is known, on June 1, the source said.

In a speech June 2, Mr Parente promised to deliver within 120 days a five-year plan to sell assets, cut debt and costs and focus its shrinking investment capital on offshore oil exploration and production, the company's most profitable business.

He has also promised to do this without a government bailout.

Former CEO Aldemir Bendine had promised to deliver a revised five-year plan by mid 2016 but was pushed out of his job by interim-Brazilian President Michel Temer.

Mr Temer, the former vice-president, took over in May from suspended President Dilma Rousseff, who is facing a Senate trial for allegedly breaking budget laws.

Mr Temer and Mr Parente are committed to easing state control of Petrobras that was increased by Ms Rousseff, a former Petrobras board chairman.

They see foreign investment and asset sales as the best way to revive investment in an oil industry responsible for more than 10 per cent of Brazil's gross domestic product.

Petrobras, among the world's 10 largest companies by market value eight years ago, is a shadow of its former self. Its debt has ballooned to nearly US$130 billion (S$173.8 billion), nearly bankrupting the company.

Petrobras' falling share price has wiped out about US$250 billion of investor value thanks to a corruption scandal, fuel subsidies and falling world oil prices.