Graft scandal threatens Petrobras goals - Fitch

Bnamericas Published: Monday, November 17, 2014
Graft scandal threatens Petrobras goals - Fitch

Claims of corruption and mismanagement pose a growing threat to the production targets of Brazil's state-run oil firm Petrobras, according to credit ratings agency Fitch.

Supply firms are expected to exercise "incremental caution" when signing or renewing new contracts with the company, Fitch said in a statement on Monday.

"This issue will be most relevant for modifying specifications for floating, production, storage, and offloading (FPSO) units under construction, which could cause delays in deliveries and therefore affect long-term production growth," Fitch said.

Petrobras has been shaken in recent months by a graft scandal that has prompted a federal police probe, dubbed Operation Car Wash.

Fitch said it had incorporated a six-month delay for new FPSO startups in Petrobras' ratings.

"Every additional six month-delay reduces 2018 estimates by around 300,000boe/d," Fitch said. "An average delay of 12 months or more in bringing new production units on-line could significantly weaken Petrobras' standalone credit quality and result in negative rating actions."

Petrobras plans to double domestic oil production to 4.2Mb/d by the end of the decade as it develops fields deep below the Atlantic seabed.

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