By Richard Mann, Contributing Reporter

RIO DE JANEIRO, BRAZIL – Brazilian Oil giant Petrobras announced record-high divestments of US$11.3 billion in the first three months of the year. The highest value transaction was the sale of 90 percent of São Paulo-based TAG for US$8.6 billion.

Petrobras and the Metropolitan Cathedral are modernist landmarks. (Photo Alamy)

The divestment of refineries serves three objectives: (a) reallocation of capital from low-return assets to invest in the pre-salt, with high expected returns; (b) release of resources to serve the still considerable debt of Petrobras; (c) correction of an anomaly, evidenced by the concentration of 98 percent of refining capacity in a single player, says the company.

As per May 2nd, the company reached a nominal capacity of 150,000 barrel per day with four producing wells.

A goal of cutting operating costs of US$8.1 billion over the period 2019-2023 has been set.
At the moment, the company focuses on easier implementation cuts.

Examples include the demobilization of the two higher-cost buildings in São Paulo and Rio (Ventura), the closure of several offices outside Brazil, in New York, Mexico City, Libya, Angola, Nigeria, Tanzania, Iran, and Tokyo, and the reduction of discretionary spending.

Operations in the U.S. have suffered losses of U$6.3 billion over the past five years, but after divestments, there is only a 20 percent stake in the joint venture with Murphy Oil in the Gulf of Mexico.

The recently launched program of voluntary dismissal is supposed to lead to a reduction in personnel expenses of R$4.1 billion.

Petrobras says it is confident that the implementation of the transformation agenda will contribute to Petrobras being a stronger and healthier company with the capacity to produce considerable value for its shareholders.

The highlight of the quarter was the progress in portfolio management, with the announcement of the signing of three contracts for the sale of assets in the amount of US$10.3 billion, related to the sale of 90 percent of TAG gas pipelines, 50 percent of the field of Green Turtle, and of Module III of Espadarte, in addition to 34 onshore production fields.

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