Brazilian state-owned oil company Petrobras has revealed that it will cut production by 3 percent which is around 100,000 barrels of oil per day in response to the global slowdown caused by the coronavirus pandemic, media reports said.
So far, the production cut is only till the end of this month, but Petrobras has left room open for further announcement of production cut in the next month. Currently, it produces over 3 million barrels of oil equivalent per day (boepd).
Petrobras also becomes the first major state-run oil company to announce a significant reduction in output in response to the coronavirus pandemic.
Responding to the coronavirus outbreak, the oil behemoth also announced the delay of dividend payment and slashed 2020 investments by nearly a third to $8.5 billion. It is also speeding-up reduction of operating expenses, with an additional decrease of $2 billion
Petrobras’ capex reduction comes after various other major oil companies such as Chevron announced similar measures in response to the coronavirus pandemic.
The Covid-19 crisis has led to significant reductions in the demand for oil products, especially diesel, gasoline, and jet fuel in Brazil and worldwide.
Earlier this month, global oil prices plunged more than 30 percent as negotiations between Russia and OPEC collapsed. Since then oil stocks across various exchanges in Asia-Pacific, Tokyo, Australia, Hong Kong, and the US plunged heavily.
Saudi Arabia, which is the unofficial leader of OPEC, started a price war with Russia after both parties failed to come into an agreement to slash production due to the coronavirus outbreak.
Since then oil producers such as Saudi Aramco and Abu Dhabi-based Aramco have ramped up production.