MercoPress. South Atlantic News Agency

Petrobras plans further 2016/20 investments cuts, says Sao Paulo media

The revised investment plans will focus on deep-water production, with less dedicated to exploration

Brazil state-run hydrocarbons giant Petrobras will reportedly present a five-year investment plan next month with a target lower than the US$19 billion plan announced last year. Despite two budget cuts last year, Petrobras' plans for the 2016 to 2020 period will include a further drop, with the cuts expected to come from onshore and shallow-water areas, according to a report in the Brazilian daily Estado de S Paulo.

 The revised investment plans will focus on deep-water production, with less dedicated to exploration and almost nothing set aside for onshore or shallow-water blocks, the newspaper reported, citing anonymous sources.

The debt-laden company is thought to have sufficient cash to meet its commitments through July 2017.

In related news rig contractor London based Ensco Plc said Petrobras has declared void a contract for a drillship leased to the Brazilian oil producer. Petrobras, chartered the DS-5 in 2008, when it was owned by Pride International, a company bought by Ensco in 2011.

Petrobras said in a notice on Monday that Pride had knowledge that the rig's shipbuilder made “improper payments” to a marketing consultant who then shared the money with former employees of Petrobras. Ensco has denied allegations of corruption in Brazil.

Dozens of Brazilian engineering firms accused of price fixing and overcharging Petrobras for work, in order to pass on excess funds as bribes to executives and politicians, have been blacklisted from signing new contracts but have not had existing contracts voided by Petrobras.

Brazilian federal prosecutors said in August that criminal charges related to the DS-5 charter were coming “in due course” but have not yet presented them.

Ensco reiterated on Wednesday it had found no evidence that Pride, the company, or any current or former employees were aware of or involved in any wrongdoing. The rig contractor said it planned to assert its legal rights under the contract.

Ensco's other rigs leased to Petrobras will continue to work under their contracts, the filing said.