Boston, MA 10/22/2013 (wallstreetpr) – Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) has everything going wrong at the moment. The Brazilian government for instance imposed some new regulations on all companies so as to keep the country’s inflation level below 6%. Due to these new regulations companies like PBR have suffered financially because of higher operating cost.
As if that is not enough, a proposed auction in which 11 major oil exploration companies are expected to participate in a bid to sell off the Libra prospect has come under great attack from the company’s workforce. The Libra prospect according to government and expert opinions is the largest off shore oil reserve with an estimated 12 billion barrels. 90% of the company’s workforce downed their tools to protest its auction as well as to seek a pay hike of at least 11.6%. The company is willing to give them a 7.7% increase but the workers refuse to give in. The workers also want foreign companies locked out of the auction as well. As much as the company insists that operations are continuing as normal it is only a question of how much longer it can keep running with only 10% of the work force.
The PBR woes are becoming more and more eminent with its current market capitalization standing at $101.80 billion down from $200 billion three years ago. However, the company is not letting go just yet. It intends to inject $236 billion in a period of 4 years and also increase its production by 50%. This will help pump up much needed revenue for the company and that increase in production will be facilitated by the just completed nine production units.
Despite the strike, thecompany as well as the Brazilian government has every intention of auctioning of the Libra prospect. To make sure this goes through, the army has been called in to make sure that everything goes as planned.
