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Brazil's Petrobras cuts 5-year investment plan by 37%

Staff writer |
Brazilian state-run oil company Petróleo Brasileiro SA said (Petrobras) it plans to slash investments by 37% over the next five years.

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Petrobras expects capital spending over the 2015-2019 period to total $130.3 billion, the company said in a long-delayed document outlining its five-year business plan. Petrobras's previous five-year plan, through 2018, listed $206.8 billion in projects under way.

The amount of divestments in 2015/2016 was revised to $15.1 billion (of which 30% from Exploration & Production, 30% from Downstream and 40% from Gas & Power). The Plan also anticipates additional efforts in the restructuring of businesses, demobilizing of assets and additional divestments, totaling $42.6 billion during 2017/2018.

The cutback has huge implications Brazil's economy, which is already forecast to contract by more than 1% this year. Petrobras is the nation's single biggest source of investment, supporting a massive network of suppliers and construction activity.

Its sales in 2014 were equivalent to around 6% of Brazil's GDP, while its capital expenditures accounted for nearly 8% of total investment.

The revised plan also deals a significant setback to Brazil's ambitions of joining the world's top five oil-producing nations by the end of this decade.

Petrobras reduced its 2020 domestic production target to 2.8 million barrels of oil equivalent a day, down from a previous goal of 4.2 million barrels.


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