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Petrobras: Drilling in Troubled Waters?
Introduction
In October 2013, American credit rating agency Moody’s downgraded the long-term debt rating of Brazil-based multinational energy corporation Petróleo Brasileiro S.A. (Petrobras) to Baa1, the third lowest investment grade rating offered by the rating agency . The rating signified that Petrobras would have large negative cash flow over the next few years. |
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Petrobras, a state-owned enterprise, was founded in 1953, and had a monopoly over oil exploration in Brazil till 1997 when oil production was liberalized. In 2007, Petrobras discovered offshore reserves in the pre-salt cluster . With the pre-salt reserves estimated to have reserves about 50 to 100 billion barrels of oil – some experts believed that oil production would reach 5 million bpd by 2020 and propel Petrobras into the league of the next oil superpowers........
