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Petrobras To Sell “Junk” Oil Fields To Pay Debt

Petrobras rigx

Brazilian state-owned oil giant Petrobras plans to sell nine oil fields as part of its previously announced move to lower the company’s massive debt.

The Wall Street Journal reported on 4 July the company is seeking buyers for the shallow-water oil fields located in the northeastern states of Ceará and Sergipe, which produced on average some 13,000 barrels of oil and natural gas per day in 2015.

The sites themselves account for 0.5 percent of total output for Petrobras and are unlikely to significantly cut into the firm’s $126 billion debt. Despite the low production, the scandal-plagued company at the center of a major domestic corruption probe is attempting to rid itself of nonessential assets as part of a $15-billion divestment plan.

Anonymous sources purportedly close to the company and with direct knowledge of the fields up for sale or briefed by Petrobras CEO Pedro Parente explained to Reuters that the fields are old and come with substantial costs for safe closure under environmental and other laws.

"The fields are junk," one of the sources said. "Unless Petrobras shoulders the labor-related costs of selling the fields and laying off workers and some of the shut-in costs that will come sooner rather than later, the fields offer little upside even though almost anybody can run them cheaper than Petrobras."

Petrobras announced the sale after Parente spoke with Sergipe state officials over the firm’s plans. He also discussed delays in the development of offshore oil fields controlled along with Indian companies Oil and Natural Gas Corp and IBV Brasil Ltda.

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Sergipe gets about a quarter of its industrial output from Petrobras, which likely explains why one of the unnamed sources who spoke to Reuters was none too pleased with the firm’s decision.

"We're stuck," one of them said. "Petrobras is cutting crucial investment and thousands of jobs in Sergipe and can't or won't invest in new discoveries that could transform people's lives here. The shallow water sales, even if they happen, won't help much."

Shares of Petrobras have subsequently fallen by 8.03 percent to $6.87 in early morning trading at the New York Stock Exchange on 5 July.

By Erwin Cifuentes for Oilprice.com

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  • Jeb Blount on July 06 2016 said:
    Hey Erwin, when you take information from another source, it is customary to give credit to the source. The "junk" comment you took came from my Reuters story. I assume other stuff came from our story too. A google search isn't reporting, it may be research, but you should have cited Reuters as any ethical researcher would do. Rewriting other people's stuff without giving them credit isn't really very honest. I'm glad you found my article useful. I suggest, though, you stop taking credit for reporting you didn't do. Cheers, Jeb Blount, Reuters

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