These are tough times for global oil markets, but they have hit especially hard for Brazil’s semi-public multi-national energy corporation, Petrobras. Add that to allegations of corruption, and its stock has plummeted. CCTV America’s Paulo Cabral took a look at the present and future of Petrobras from Brazil.
Brazilian oil giant Petrobras suffers from global oil markets, corruption allegationsThese are tough times for global oil markets, but they have hit especially hard for Brazil's semi-public multi-national energy corporation, Petrobras. Add that to allegations of corruption, and its stock has plummeted. CCTV America's Paulo Cabral took a look at the present and future of Petrobras from Brazil.
In 2008, Petrobras announced the discovery of the gigantic pre-salt oil province. Brazil’s economy was booming amid an international crises and investing in its state oil company seemed obvious.
But recent events have changed things. According to investment analysis group Economatica, last year Petrobras’ stock dropped 37 percent, and its market value fell by 41 percent.
It was a tough year as oil prices dropped and executives were arrested over a massive corruption scandal. Federal prosecutors said an alleged kickback scheme in which construction companies overcharged Petrobras contracts was key in the investigation.
“Further losses that shareholders may face due to misallocation of resources, of mismanagement in large projects, in large downstream projects, like the refineries, are still to be calculated and as well written off,” Petrobras’ analyst Fabio Fuzetti of Antares Capital said.
Critics also said there was so much political use of the company that fuel prices were kept low when oil prices were high to contain inflation. Buyers liked it, but Petrobras lost much money.
While the problems facing Petrobras mount, analysts said the oil company still has growth potential if it manages to reorganize and gain the confidence of the market again.
Former director of Petrobras, Ildo Sauer, said the company’s technical expertise and vast reserves may guarantee its future if it fixes its act.
“The government and the Brazilian society have to understand that an intervention in Petrobras is required to make Petrobras an autonomous company no longer submitted to the interests of political parties of political groups. It has to be run professionally,” Sauer said.
Paulo Sotero on the impact of Petrobras’ on the Brazilian economy
CCTV America’s Phillip Yin interviewed Paulo Sotero, the Brazil Institute Director at the Woodrow Wilson Center in Washington, D.C. He discussed the state of Petrobras, the ongoing investigations, and the impact the energy company will have on the Brazilian economy.