Petrobras Cuts Management Jobs
Petrobras said on Thursday it will cut about one in five management jobs, streamline operations and boost oversight as the state-led oil company adapts to low oil prices and tries to boost confidence after a corruption scandal.
The measures will save Petrobras about 1.8 billion reais per year ($442 million), Chief Executive Officer Aldemir Bendine said.
Bendine and Petrobras are struggling with a nearly 50 percent decline in the price of oil in the past eight months, complicating efforts to finance investments and pay down nearly $130 billion in debt, one of the largest of any non-financial company.
"This will involve a very big change in company culture but I'm very satisfied with the model," Bendine told reporters in Rio de Janeiro. "The company will have a less fragmented structure and become a more integrated system."
Management cutbacks are limited to non-operational administrators, including 14 senior executives. They will not, though, involve any actual job cuts.
Petrobras managers, like Brazilian civil servants, are hired through competitive exams and are difficult and expensive to fire. Much of the savings will come as they move to non-management positions and lose salary bonuses given to managers.
Petrobras has 7,500 managers and about 5,300 of them are non-operational executives. The plan aims to eliminate 30 percent of the non-operational management positions.
The moves to centralize contracting and purchasing, Bendine said, will allow senior executives to more actively debate projects and costs, making it harder to hide wrongdoing.
The board also approved a cut in business units to six from seven and the centralization of contracting and purchasing that Bendine hopes will increase financial oversight.
The company will set up oversight committees for each business unit, and include their responsibilities in company by-laws. The changes will increase the ability of Brazil's securities and exchange regulator to punish mismanagement, Bendine said.
Management promotions will be made on merit, not political considerations, he said. Five former senior executives have been convicted for crimes related to a price-fixing, bribery and political-kickback scandal.
Despite long careers at Petrobras, all were promoted at the request of political leaders whose parties benefited from their actions.
"Political interference in appointments will no longer have a place at Petrobras," Bendine said.
Petrobras is preparing for a world with low oil prices, Bendine said, adding the company misjudged in predicting Brent crude oil averaging $60 a barrel in 2015 and 2016. It averaged $53.60 last year and has fallen as low as $27.88 since.
Brent crude oil traded at $34.08 on Thursday.
Bendine said Petrobras would most likely release its new strategic plan in March, and the level of international oil prices would play a major role.
"We are preparing the company for Brent at $30, at $20 (a barrel), it doesn't matter," Bendine said, adding that Petrobras' current production costs for ultra-deep subsalt oil off the coast of Brazil was extremely competitive even at current prices.
He said the subsalt fields, which include giant discoveries trapped by a layer of mineral salts five or more kilometers beneath the ocean and seabed, have operating costs of $8 a barrel, but he declined to break down the costs.