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By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – With plans to drastically reduce its expenses, but finding no support from falling international oil prices and a plummeting Brazilian currency, the country’s oil giant, Petrobras, is taking drastic measures. The company’s executive directors approved last week the non-renewal of third-party contracts, which in practice would mean a reduction of over five thousand employees.

Rio de Janeiro, Brazil, Brazil news
Petrobras and public construction are impacted by the corruption scandal, photo courtesy of Petrobras.

According to a report by daily Estado de S. Paulo, the company has also agreed to reduce managerial posts and implement a widespread restructuring plan, which could mean further layoffs of both third party and Petrobras’ employees. According to the newspaper plans for new cuts in personnel and in investments are expected to be presented to the company’s board of directors within thirty days.

Rumors of a possible new credit downgrade by a second ratings agency led Petrobras’ shares to fall over three percent in one day. On September 10th, S&P had downgraded the company to junk status after withdrawing investment grade from Brazil’s ratings.

In the first semester, with reports that widespread corruption, bribes and devaluation of assets (impairment) cost the company over US$17 billion in 2014, the company announced a reduction by 41 percent of its business plans. The results for the second quarter of 2015 continued gloomy, with data showing that the company’s net revenues declined by almost ninety percent in relation to the same period last year.

In August, to start its massive restructuring project the board announced that it had authorized the sale of 25 percent of stock from its subsidiary, BR Distribuidora.

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