UPDATE 2-Petrobras slashes capex in bid to cut debt, restore confidence
(Adds investor and analyst comment, additional plan detail)
By Jeb Blount
RIO DE JANEIRO, June 29 (Reuters) - Brazil's state-run oil company Petrobras slashed its long-term spending plan to the lowest level in eight years on Monday as new management moved to reduce the industry's largest debt burden and restore confidence after a devastating corruption scandal.
Petroleo Brasileiro SA, as the company is formally known, will invest $130.3 billion in the 2015-2019 period, the company said in a statement. The capital expenditure plan is 41 percent lower than the $221 billion projected in its previous five-year plan, covering the 2014-2018 period.
It also trimmed its 2020 forecast for its global production by nearly a third to 3.7 million barrels of oil and equivalent natural gas a day (boepd), from its estimate of 5.3 million boepd a year ago.
The investment plan, the company's smallest since 2008, is its first major admission that spending and expansion plans imposed on it by two successive center-left Workers' Party governments over the last decade were not realistic, especially in the face of falling world oil prices.
The plan again postpones the government's hopes of turning high-potential oil fields off the coast of Rio de Janeiro into a political bonanza. Since their discovery almost a decade ago, Brazilian President Dilma Rousseff, who was energy minister at the time, had promised to use the profits from selling such new deepwater oil finds to build schools and hospitals, helping Brazil join the developed world.
Those hopes have receded as a massive kickback scandal has made Petrobras synonymous with political corruption and transformed the company into a liability for Rousseff, who has not been directly implicated but did serve as the company's chair for several crucial years.