• 20 mins London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 1 hour Rosneft Signs $400M Deal With Kurdistan
  • 4 hours Kinder Morgan Warns About Trans Mountain Delays
  • 10 hours India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 15 hours Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 19 hours Russia, Saudis Team Up To Boost Fracking Tech
  • 1 day Conflicting News Spurs Doubt On Aramco IPO
  • 1 day Exxon Starts Production At New Refinery In Texas
  • 1 day Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 2 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 2 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 2 days China To Take 5% Of Rosneft’s Output In New Deal
  • 2 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 2 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 2 days VW Fails To Secure Critical Commodity For EVs
  • 2 days Enbridge Pipeline Expansion Finally Approved
  • 2 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 2 days OPEC Oil Deal Compliance Falls To 86%
  • 3 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 3 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 3 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 3 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 3 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 3 days Aramco Says No Plans To Shelve IPO
  • 6 days Trump Passes Iran Nuclear Deal Back to Congress
  • 6 days Texas Shutters More Coal-Fired Plants
  • 6 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 6 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 6 days Chevron Quits Australian Deepwater Oil Exploration
  • 6 days Europe Braces For End Of Iran Nuclear Deal
  • 7 days Renewable Energy Startup Powering Native American Protest Camp
  • 7 days Husky Energy Set To Restart Pipeline
  • 7 days Russia, Morocco Sign String Of Energy And Military Deals
  • 7 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 7 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 7 days India Needs Help To Boost Oil Production
  • 7 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 7 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 7 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 7 days District Judge Rules Dakota Access Can Continue Operating
Alt Text

World’s Biggest Oil Trader Questions Its Own Fate

The world’s no.1 crude oil…

Alt Text

Draw In Crude Inventories Lifts Oil Prices

Oil prices reversed course on…

Good News At Last For Petrobras

Good News At Last For Petrobras

Petrobras announced on March 24 that it has discovered a significant deposit of oil just of the coast of Rio de Janeiro. The company says that it encountered a 200 meter column of hydrocarbons in its Libra block, at depth of about 5,780 meters (18,963 feet).

The news was a major boost to a company that has been drowning in debt and scandal. Petrobras has now amassed $130 billion in debt, having added $22 billion in additional debt in just the last six months because of the deteriorating Brazilian currency. Petrobras, by and large, earns revenues in reals but owes debt in dollars, not a good situation to be in when the local currency plunges the way it has over the past year. Already the most indebted oil company in the world, Petrobras’ fortunes have soured due to a combination of falling oil prices, rising debt, and an extensive bribery scandal that has reached high up the food chain. Related: Three Triggers That Will Send Oil Crashing Again

Nicknamed the “Petrolão,” the corruption scandal continues to beat down the company’s share price, public image, and creditworthiness. Due to difficulty in accounting the extent of the scandal-related costs, Petrobras has not posted financial numbers since the third quarter of 2014, raising serious concerns over the possibility that it will be found in technical default. Its credit rating is now deep into junk territory.

The scandal could even bleed over into Petrobras’ day-to-day operations. The network of contractors that do a lot of the legwork and supply the oil company with equipment has been swept up in the investigation. Some contractors have been banned from working with Petrobras, others are facing cash shortages as the scrutiny has slowed business with the oil giant. As a result of the crackdown, the delivery of vessels needed to tap the vast pre-salt basin off Brazil’s southeastern coast could be delayed by at least a year. Related: Oil Prices Will Recover: Market Fundamentals Are Working

Petrobras had set a goal of doubling its oil production by 2020, but that is looking increasingly out of reach. Delays related to the scandal, coupled with lower investment as a result of low oil prices, could lead to lower production increases than once expected.

Still, headed up by its new CEO Aldemir Bendine, Petrobras hopes to turn things around. On March 25 Brazilian securities regulators have given a thumbs up to Petrobras’ approach to valuing scandal-related costs, which could pave the way to official financial reporting. The likelihood that the company may be edging closer to clearing up the bad blood with creditors provided a lift to both its share price and the price of its corporate bonds. Related: Oil Price Speed Limit Presaging An Age Of Austerity?

The March 24 news that it had discovered oil in the Libra block was also a shot in the arm. Once the scandal is dealt with, Petrobras can return to focusing all of its resources on its core mission, which is finding and producing oil.

By Charles Kennedy for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News