Business & Economy

Petrobras sees record 2019 gains wiped out in 1st qtr.

Rio de Janeiro, May 14 (efe-epa).- Petrobras said Thursday that it suffered a net loss of 48.5 billion reais ($8.4 billion) in the first quarter, more than the record profit of $6.92 billion the Brazilian oil giant booked in 2019.

The figures for the first three months reflect management’s decision to take an impairment of 65.3 billion reais on its exploration and production assets to adjust those values in light of the economic impact of the coronavirus pandemic.

“In contrast to what happened in 2008-2009, we are predicting a slow recovery in global economic activity and, consequently, in demand for fuels. The nature of the shock is different, more powerful,” Petrobras CEO Roberto Castello Branco said in a statement accompanying the results.

Brazil’s largest enterprise took in revenues of 75.5 billion reais in the first quarter, an advance of 6.5 percent over the same period in 2019, while earnings before interest, taxation, depreciation and amortization grew 36.4 percent to 37.5 billion reais.

Looking ahead, the company forecast a long-term price for Brent crude – the European benchmark – of $50 a barrel, down from its earlier projection of $65 per barrel.

Global oil prices have plunged in tandem with the abrupt slowdown in economic activity due to efforts by government to contain Covid-19, which is blamed for more than 300,000 deaths around the world.

The OPEC+ group, which includes the world’s top oil-producing countries, has pledged to cut output in a bid to stabilize prices, Castello Branco described the chances that those pledges will be honored as “quite uncertain.”

The CEO also cited trends that could depress crude prices for the foreseeable future.

“The behavioral changes generated during the social distancing phase and the governmental incentives to replace fossil fuels are other factors that lead us to have a more cautious view on the evolution of oil prices over the next few years,” he said.

Petrobras said late last month that it increased production by 14.6 percent in the first quarter compared with the first three months of 2019. EFE cm/dr

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