RIO DE JANEIRO, Sept 14 (Reuters) - Brazil’s state-run Petroleo Brasileiro SA is slowing down a planned sale of assets and turning its attention to cost cutting to trim its massive debt, a senior company source told Reuters on Monday.
The change in strategy by Petrobras, as the company is known, means that the plan to sell up to 25 percent of distribution unit BR Distribuidora SA is now on hold, said the source, who is directly involved in company planning.
The realization that the company will be unable to meet its goal of selling $15.1 billion of assets by the end of 2016 is the latest sign that the company’s $130 billion five-year investment plan, announced less than three months ago, is already obsolete, the source said.
“In this environment, the investment doesn’t have a leg to stand on,” said the source, who requested anonymity because changes to company plans are still under discussion and are not yet formal company policy.
Representatives for Petrobras did not immediately respond to a request for comment.
The investment plan announced in June cut planned spending by about 40 percent. At the time it was heralded by company officials as the tough dose of realism needed to cut the company’s debt, which at upwards of $130 billion is the largest of any oil company.
It was also seen as the first step by company officials to regain investor confidence in the wake of a bid-rigging, bribery and political kick-back scandal.
But despite the June cutbacks, Petrobras still struggles to meet its targets.
As oil prices have continued to languish and the real weakens further, many of the price and asset-sale assumptions of the plan are already out of date, a situation likely to result in more cuts, Reuters reported on Thursday.
Nor does anyone seem excited to buy what Petrobras has to offer.
“In this environment, we will only sell if the asset that has not been affected by this economic situation and volatility,” the source said. “The majority of the assets on sale have this volatility. We will have to slow things down or hold on for a better moment.”
Cost cutting, though, may be difficult. In the last three quarters Petrobras’ costs for things like materials, services, transport and rents actually rose, according to a report in the Folha de S. Paulo newspaper.
“In a situation like this you have to manage costs,” the source said. “We have all costs in our sights, including personnel.” (Reporting by Rodrigo Viga Gaier; Writing by Jeb Blount; Editing by Lisa Shumaker)