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The federal audit court of Brazil has ordered the company to start its asset sale program from square one, except for two projects. The program was suspended with a December injunction, while the audit court undertook a review. That court has now ruled to overturn the injunction.
Now, the only two assets that Petrobras will be able to sell without the need to go back and start from scratch are a part of its drilling rights in the deepwater sector of the Gulf of Mexico and the Bauna and Tartaruga Verde fields off the Brazilian coast.
The rest of the assets that the Brazilian state-owned giant had put up for sale and had started negotiations over will have to be sold under different rules stipulated by the audit court—rules that have not yet been disclosed. The court’s infrastructure coordinator, however, told Reuters that the purpose of the rules is to make the divestment process more transparent.
Petrobras launched its asset sale program five years ago, and has since then sold around 30 assets, among them its Argentine and Chile operations. Another 40 assets need to be divested as the company struggles with the largest debt in the global oil industry, exceeding $100 billion.
This year and next, Petrobras has to meet debt obligations amounting to $24 billion. To be able to do this, the company planned to generate proceeds of $15 billion from asset sales in the period. Now that it has to restart the divestment process, its costs associated with the divestment program will rise, affecting the proceeds.
Recently, Petrobras also bought back almost $5.6 billion worth of bonds as part of efforts to reduce its debt load.
Related: New Oil Price War Looms As The OPEC Deal Falls Short
The Brazilian giant is still reeling from the combined blow of the oil price crash and a graft scandal that led to the ousting of the country’s President Dilma Rousseff, but it seems things are starting to improve. In January, the company said it was going to increase exploration, production, and refining expenditure by 30 percent with the outlays for 2017 seen at $19 billion, up from $14.6 billion last year. Cash on hand, according to CEO Pedro Parente, stood at $22 billion at the start of this year, which would keep Petrobras active for another two years.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.