Petrobras, the world’s most indebted oil company at $114.3billion (£68billion), slashed its five-year investment plan by $16billion (£9.6billion) as it cut spending in its unprofitable refining division.
The Brazilian state oil company will spend $220.6billion in a plan through 2018, 6.8% less than had been earmarked in its prior plan.
Investments in the refining division will drop to $38.7billion from $64.8billion in the previous plan.
Petrobras increased the price of gasoline by 4% and the price of diesel by 8% on November 29, the first boost in nine months, as part of its attempt to cut the gap between global and domestic prices.
The refining division has lost about $37billion since 2011, when the government, which owns the majority of the company’s voting shares, started making Petrobras subsidize imported fuel.
Gasoline and diesel imports are curbing profit as Petrobras pays more than what it receives from domestic distributors for the fuel at subsidized prices. The government has prevented the company from increasing prices enough to erase the losses as it seeks to keep inflation in check.
Petrobras’ fourth-quarter profit dropped 19% – less than analysts expected, as net income slid to 6.28billion reais ($2.68 billion), from 7.8billion reais a year earlier, the company said in a separate statement.
The company reiterated its 2020 domestic output target of 4.2million barrels a day of oil and liquefied natural gas. It will spend $153.9billion in exploration and production in the five-year period, up from $147.5billion in the prior plan.
Petrobras said the exploration and production unit had higher quarterly profit than a year ago because of increased volumes, fewer dry wells and the sale of a stake in an offshore oil field.
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