Petrobras logistics unit mulls suspending some operations: memo

[RIO DE JANEIRO] Transpetro, the logistics unit of Brazil's state-run oil company Petrobras, is looking at suspending some operations and downsizing its real estate footprint, it said in an internal memo this week, telling staff that cost-cutting was key to ensuring short-term liquidity.

The memo fleshed out aspects of an austerity plan that Petrobras announced a day earlier. As part of that plan, the company said Transpetro, which operates almost 5,000 miles (about 8,046 kilometres) of pipelines and has a fleet of over 50 ships, would reduce or delay payments of 507 million reais (S$137.9 million).

The memo said 205 million reais in savings would come from operational expenses, such as "renegotiating contracts" and "optimising assets, eventually with the suspension of certain services/assets". Transpetro is also looking at "returning buildings" and increasing "remote work".

Transpetro plans to save 175 million reais by postponing some investments, the memo said, such as maintenance at storage tanks and other facilities. It will also save 246 million reais in human resources costs, by postponing compensation and training, among other measures.

Petroleo Brasileiro SA, as the parent company is formally known, did not respond to a request for comment, nor did Transpetro.

Crude prices have crashed this year as Saudi Arabia and Russia battle for dwindling sales in a market battered by the coronavirus pandemic. Petrobras is among a number of oil companies that have throttled back operational and capital expenditures, and in some cases production.

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The Transpetro memo highlighted several short-term actions Petrobras has taken to ensure its financial health, but said that additional measures were needed.

"A scenario with Brent at US$25 per barrel and a five reais to the dollar exchange rate could cause (Petrobras) to lack resources/liquidity in the short-term," the memo said.

REUTERS