Petrobras drastically cuts investment by 37% in next five years

Jun 30, 2015 12:00 AM

State-controlled oil giant Petrobras, which is mired in a corruption scandal that has rocked Brazil, said Monday it was cutting investment by 37% during the 2015-2019 period. Investment during the period will now total $130.3 billion, down from the $220.6 billion originally planned, Petrobras said in a filing with the Sao Paulo Stock Exchange.

“The investment portfolio will give priority to petroleum exploration and production projects in Brazil, with the emphasis on the pre-salt,” Petrobras said, referring to the deepwater fields discovered nearly a decade ago in the Atlantic.

The exploration and production business will receive investment totaling $108.6 billion, with the rest of the funds going into the company's other divisions, Petrobras said.

“In the other business units, investment will be basically destined for maintaining operations and projects related to petroleum and natural gas distribution” the company said.

The production target is 3.7 million barrels per day (bpd) by 2020, when about 50% of output is expected to come from the pre-salt, Petrobras said. Production hit 2.7 million bpd in May, of which 2.1 million bpd were produced domestically, Petrobras said.

Several former senior Petrobras executives and more than a score of executives of leading construction companies that had contracts with Petrobras have been arrested as part of an investigation into corrupt practices at the energy company.

The former treasurer of the governing Workers' Party, Joao Vaccari, also has been arrested and charged with corruption, criminal conspiracy and money laundering.

Most of the 50 or so politicians caught up in the case are from parties supporting President Dilma Rousseff's administration. Money from the scheme was often delivered to political parties in the form of legal and duly registered campaign donations, according to investigators.

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