Petrobras Brazil plan opens more queries than answers

Subject

The outlook for Petrobras.

Significance

Following the steep fall in the oil price and impact of the 'Car Wash' corruption scandal, state-controlled oil company Petrobras has announced a scaled-back 2015-19 business and management plan. Credibility is a major issue: Petrobras has missed its annual production targets since the Workers' Party (PT) came to power in 2003.

Impacts

• Petrobras's spending cuts will conflict with government efforts to stimulate the struggling economy.
• The announcement of the new plan suggests that the new CEO will adopt a more realistic strategy.
• Reduced refining investment will force Petrobras to continue importing refined products, sold at a loss.