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Petrobras Won't Sell Oil Fields

Petrobras

Published Apr 16, 2015 6:35 PM by The Maritime Executive

Brazilian state-run oil company Petrobras said on Wednesday it has no plans to sell sub-salt oilfields in a divestment program aimed at shoring up its finances.

Petrobras denied a report by newspaper Valor Economico that it could sell assets in that deep-water region, which holds some of the world's largest oil reserves but is expensive to operate.

"The divestment plan, as approved, does not include sub-salt assets," Petrobras said in a securities filing.

Petrobras, already one of the world's most indebted oil companies, has come under pressure due to a massive corruption scandal that has cut it off from debt markets and forced it to halt activity at worksites throughout Brazil.

Valor Economico reported on Wednesday that the company could include some exploration licenses that are not under production-sharing agreements and a 10 percent stake in the Libra field in the sale plan.

The asset sales are part of a $13.7 billion divestiture program announced early in March, set to take place this year and next.

Petrobras had said previously that divestitures in exploration and production could account for roughly 30 percent of the total value to be raised.

Subsalt deposits refer to an area in Brazil's Santos and Campos basins where large oil discoveries have been made deep beneath the sea floor under a layer of salt.

Petrobras to cut investment plans

Petrobras plans to slash projected investment over five years by 20 percent compared with its previous five-year plan, a person with direct knowledge of the discussions told Reuters on Thursday.

A 20 percent cut would reduce planned spending under the company's 2015-2019 business plan by about $44 billion, to nearly $177 billion. Petrobras projected $221 billion of investment in its 2014-2018 program. The new plan is expected to be announced next month, said the source, who was not authorized to speak publicly on the matter.

"There may be a reduction of around 20 percent," the person said. "It's still a robust investment plan, but it's realistic about cash flow and what the company can do given that its suppliers are under investigation."

After a decade of missed production targets and rising spending Petrobras has struggled to generate enough cash to pay for one of the world's largest and most ambitious output-expansion efforts. Despite massive new offshore resources, Petrobras is the world's most-indebted and least-profitable major oil company.

Copyright Reuters 2015.