The state-owned oil company is forced to make additional investment changes to its budget due to declining oil prices.
In the coming weeks, Petroleo Brasileiro SA Petrobras will be presenting a five year investment plan which is said to be leaner then the initial $19 billion investment that it had announced earlier in October, 2015, as per the news reported on Thursday in Estado de S. Paulo. As per the news, it is expected to be presented in February; however the source has not been identified.
An increase in the asset divestitures along with the addition of capital expenditure is likely to happen in the coming year. According to the Brazilian newspaper, the main reason as to why these revisions have been made in budget could be because of the declining crude oil prices. On Thursday, the crude oil prices hit an 11-year low because of the weak Chinese economy.
In comparison to the Global benchmark for crude oil, the US benchmark – West Texas Intermediate (WTI) dropped by 2.09% and was selling at a price of $33 per barrel however the Brent Crude had a decline of 1.84% at $33.60 per barrel. It has been a rough two year in a row for Petrobras, during with the Brazil-based company went through a huge corruption scandal which started back in 2014. Since that time, the stock of the petrol company has dropped by 70.96%.
Considering that it is one of the indebted energy companies in the world, the massive corruption scandal was not the only issue it had on its plate. All these issues together did not at all make a good combination that the energy giant had to deal with. All the declining aspects of the market and investment cut have made the stock drop in real-time trading as well. Petrobras stock is close to its 13-year low down by 3.29% at a share price of $3.82. In case the situation of the crude oil market does not improve; it is highly likely that the stock will fall further.
All in all, there is a big possibility that 2016 will not be a good year for the energy company as well as its chief executive officer, Aldemir Bendine. The analysts at Wall Street are predicting that this is not the end of the challenges that will be faced by the CEO which include corruption scandals, constantly low crude oil prices etc. and at this point many believe that he will not be able to handle these challenges too well.
A net loss of $97.3 million was reported by the state-owned oil major in quarter third of fiscal year 2015 while a 37% decline in the stock was witnessed in the last one year.
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