Petrobras, one of the most powerful companies in Latin America,
is in a quandary. The Brazilian state-run oil company needs to
increase production and revenues, and pursue an ambitious
investment program to explore oil reserves in hard to access,
BRAZIL PETROBRAS: On troubled waters
When it comes to pursuing its ambitious investment program, Petrobras remains undeterred by a mounting debt burden. Concern among equity investors, however, is growing. By Thierry Ogier
But, at the same time, investors — some of whom
pumped $70 billion in a record share offering in September 2010
— have become increasingly wary of the
company’s mounting debt burden.
The reason is simple: in recent years,
Petrobras’ oil output has been flat. Moreover, it
has failed to meet its own production targets.
Yet Petrobras’ ambitions remain undiminished.
The company says it intends to double its output by the end of
the decade. But is this achievable? It took 60 years for it to
pump 2 million barrels per day; it now proposes to add the same
amount to its daily output in just seven years.
Already have an account?
Subscribe now for unlimited access to all current and archive news, data and market analysis.
Take a free two-week trial now for the latest news, data and market analysis.