UPDATE 3-Brazil's Petrobras slashes spending to cut debt, restore confidence
(Updates with press conference)
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 was made with boldness," Chief Executive Officer Aldemir Bendine, told reporters at company headquarters in Rio de Janeiro late Monday. "Our main objective is to reduce the company's indebtedness."
DEBT RESOLUTION DISTANT
Yet even with a more than $90 billion cut in spending Petrobras does not expect to get its $120 billion of debt down to levels it considers satisfactory for at least six years. Net debt, or total debt minus cash is now 52 percent of net capital and nearly four times cash flow. It is expected to fall below 35 percent and 2.5 times cash flow only in 2020. Continuación...