Petrobras, the state-owned oil firm, saw its net losses increase to $10.2bn in the three months leading to December, a decline that has been attributed to low oil prices.
Brazil’s Petrobras Records Historic $10.2bn in Quarterly Losses
This loss is 39% more than a year earlier when Petrobras earnings were cut down as a result of write-downs triggered by a bribery/bid-rigging scandal.
The massive year on year losses increase uncertainty around the oil giant’s capacity to clear its debt burden, the largest debt level in the world’s oil industry.
Exacerbated by a strong dollar, Petrobras saw its debt increase to 220.68 bn by the end of 2015, a 10% increase from 2014.
Following the plunging oil prices, the firm was forced to write down assets worth billions of dollars including drilling rigs and oil fields.
In US afterhours trading, shares of the oil giant fell by as much as 6% with Aldemir Bendine, the chief executive, admitting at a press conference that the past year had been extremely challenging for the oil industry.
Mr. Bendine said in a statement that the losses faced by the company could result to some uncertainty among investors. Even then, he asserted, the company continued to be resilient amid low oil prices.
Dwindling oil demand
In addition to weak demand for oil, Petrobras has been embroiled in a massive corruption saga that has seen many of its top executives imprisoned.
On Monday, Raul Schmidt Felipe Junior was arrested in Portugal after police said that he was involved in laundering money for two of the imprisoned Petrobras executives.
It is also suspected that the man may have played an intermediary role in Petrobras’ collaboration with other foreign companies.
Presently, Brazil is also encountering the country’s worst recession in a century, further compounding weak demand domestically, for fuel products.
Petrobras has so far lowered its investment spending and growth plans. The firm is planning to sell some of its assets to raise over $14bn.