Page 33: of Maritime Reporter Magazine (April 2016)
The Offshore Annual
ers are talking about a production freeze, on Petrobras operations and capital $80 billion. The Brazilian government One piece of good news is the deal drilling of new shale wells in the US has spending are obviously being felt. In is dealing with many problems and is Petrobras has negotiated with China to stalled and – most important – global de- March Petrobras announced plans to increasing unable to provide ? nancial access ? nancing. In late February Petro- mand for oil keeps growing. Sooner or lay off 12,000 staff – a 15% personnel backup to Petrobras. The Brazilian econ- bras signed a term sheet with China De- later supply and demand will come back reduction. Reports are circulating that omy is deteriorating at an alarming rate velopment Bank to access loans up to into balance. While many things can the (already downsized) plan to invest – with GDP falling 3.8% in 2015, expec- $10 billion in exchange for supplying oil disrupt and delay this rebalancing (e.g., $93 billion in capital projects over the tations of a similar decline this year and to Chinese companies. But this news is downturn in the Chinese economy), we next ? ve years looks about to be cut to unemployment nearing 10%. overwhelmed by bad news that seems to see a gradual recovery in oil prices over the next 6 to 12 months. This is not to say there will not be further dips. Oil prices are volatile. But the long term
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The huge inventory of oil in the mar- 1877 ket will limit near term price increases and the ability of shale production to rapidly ramp up will likely hold prices
On Board Ship Designed and Approved Nitrogen within the two digits over the next few years. But we see prices getting back to É*ÊÊÊUÊÊÊ ?i??V>Ê*À?`ÕVÌÊ/>??iÀÃÊ>?`Ê >À}iÃÊÊÊUÊÊÊ*-"É-,1ÊÊÊUÊÊÊ"-6 $60 to $70 by the end of the decade. We ® also see the potential for a supply shock
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Running in parallel with the overall market downturn has been an unprece- dented implosion in Petrobras. The Bra-
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Unfortunately, Petrobras’ problems have not been easing. The company’s credit rating was reduced to junk status in 2015 – and was further downgraded by rating agencies in Q1 2016. S&P in mid-February cut Petrobras’ bond rating from BB+ to BB and Brazil’s sovereign rating from B+ to BB with negative out- look. Moody’s in February downgraded all ratings for Petrobras as well as rat- ings based on Petrobras’ guarantee to B3
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The impact of the ? nancial pressures www.marinelink.com 33
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