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Petrobras begins roadshow to find ‘strategic’ buyers

November 13, 2015

Petroleo Brasileiro (Petrobras) will start a roadshow next week to talk to investors and find “strategic partners” for its Brazilian operations as part of an effort to reduce the biggest debt load in the oil industry, chief financial officer Ivan Monteiro said Thursday.

This comes as the scandal-hit oil company posts a $1bn loss in the third quarter and a strike drags on into its 12th day.

Executives would travel to the US, China, Mexico, Canada and the UK, among other countries, and investors had already shown strong interest for a stake in Petrobras Distribuidora, Latin America’s largest petroleum products distributor, Mr Monteiro said.

Petrobras ran little risk of missing its target to raise more than $15bn from divestments before the end of 2016, he said. The company also planned to tap international debt markets this year to secure its financial needs for 2016, he said.

“There has been a lot … of interest” in investments in the distribution unit, he told reporters at a third-quarter earnings news conference in Rio de Janeiro.

Petrobras is looking to reduce indebtedness while it grapples with a collapse in commodity prices, a widening graft scandal that has resulted in some of its suppliers seeking bankruptcy protection and oil unions that started striking on November 1 to protest against asset sales and spending cuts that threaten jobs. Shares have lost 24% this year.

Leaders of Brazil’s main oil workers’ union federation said on Thursday that a contract offer from Petrobras fell short of their demands and sought a meeting with the company’s CEO to discuss their requests.

Meanwhile, the 12-day strike will go on, said FUP, as the union federation is known, in a statement.

In recent days the strike has reduced output by about 115,000 barrels a day, or about 5.5% of daily output before the strike began.

FUP’s national council will meet on Friday to debate any response to a letter sent late on Tuesday to Petrobras CE Aldemir Bendine.

Petrobras offered the workers a 9.54% wage hike on Wednesday, about half of the 18% demanded by the union.

But the union has said that wages are not its principal demand.

If the union can arrange a meeting with Petrobras, they plan to seek guarantees that strikers will not be punished for walking off the job, that they will be paid for the days on which they were on strike and that workers at a unit in Brazil’s Paraná state have their contract brought in line with those at FUP.

The strike has become the biggest stoppage in two decades at Petrobras. It was launched by a union seeking to remove all nongovernment investors from the company and cut foreign participation in the oil industry.

FUP has asked for Petrobras to tear up a five-year investment plan that slashes spending and seeks to sell assets in an effort to cut about $130bn of debt, the largest of any oil company in the world. On Thursday Petrobras reported a $1bn third-quarter loss.

Petrobras has offered to set up a joint union-management committee to discuss these demands after the union returns to work.

Production cuts reached as high as 273,000 barrels a day at the beginning of the walkout, Petrobras says. The union says those estimates are low and that losses were as high as 400,000 barrels a day or 19% of prestrike output.

Source: Bloomberg, Reuters and AFP via BDLive

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