OREANDA-NEWS. Brazil's state-controlled Petrobras has slashed oil production targets and spending in its $130.3bn 2015-19 business plan, the first since last year?s oil price collapse and the eruption of a far-reaching corruption scandal that has eroded the firm?s finances.

Petrobras cut its domestic liquids production target for 2020 to 2.8mn b/d compared with a previous goal of 4.2mn b/d in its $221bn 2014-18 plan.

The less ambitious target represents a 30pc increase from the company?s current liquids production of 2.1mn b/d.

"The production targets in Brazil were updated to reflect the postponements of projects with lesser maturity and delays in the delivery of production units, largely due to limitations of Brazilian suppliers," the company said today in a securities filing.

Production from subsalt fields offshore is expected to account for 50pc of Petrobras? Brazilian output by 2020, a goal the company had originally planned to meet in 2018.

The company?s 2020 target for total production, including natural gas, from Brazil and abroad was also cut back to 3.7mn b/d of oil equivalent (boe/d), compared with a previous 5.3mn boe/d. Current total output is 2.8mn boe/d.

"The fundamental objective of the plan is the deleveraging of the company and the creation of value for shareholders," Petrobras said.

Upstream spending was reduced to $108.6bn, or 83pc of total spending, under the 2015-19 business plan, compared with $153.9bn, or 70pc of total spending, under the 2014-18 plan.

Around $93bn, or 86pc, of upstream spending is earmarked for development, including $64bn for new production systems in Brazil, mostly in subsalt fields.

Of the remaining upstream spending, only 11pc will be spent on exploration and 3pc on operational support.

"The investment portfolio of the plan prioritizes oil exploration and production (E&P) projects in Brazil, focusing on the pre-salt. For other business areas, investment will be largely limited to maintaining operations, and for projects related to offloading oil and natural gas," the company said.

Petrobras said exploration spending will concentrate on the minimum exploration commitments for each block.

As expected, downstream spending took the biggest hit in the 2015-19 plan. Spending in this troubled segment was reduced to $12.8bn, or 10pc of the total, compared with $38.7bn, or 18pc of the total, under the previous five-year plan.

Around $8.8bn, or 69pc of the total downstream allotment, is earmarked for maintenance and infrastructure.

The company will spend around $1.4bn on completing the second 115,000 b/d phase of the Abreu e Lima refinery. The refinery, located in Pernambuco state, has been at the center of federal investigations into corruption at the firm. Originally expected to cost around $2.5bn, the total cost of the refinery has ballooned to more than $18bn.

The first 115,000 b/d phase started partial operations in December 2014. Petrobras did not say when the second phase, originally scheduled to come on stream in May 2015, will be completed.

Around $1.3bn will be spent on "receipt and processing of gas, equipment maintenance, among others" at the planned 165,000 b/d Comperj refinery in Rio de Janeiro state. The stalled greenfield project, another one of the corruption-tainted assets, had been slated to start operations in August 2016. Petrobras did not issue a new target date.

To help pay for its more modest investment plan, Petrobras will seek to divest $15.1bn in assets, $1.4bn more than the company originally planned. Upstream and distribution assets each account for 30pc of that amount, with gas and power assets accounting for the remaining 40pc.

"The plan also anticipates additional efforts in the restructuring of businesses, demobilizing of assets and additional divestments, totaling $42.6bn during 2017/2018," Petrobras said, without elaborating.

The plan is based on oil price assumptions of $60/bl in 2015 and $70/bl in 2016-19. The Brazilian real is expected to depreciate against the US dollar from a R3.10 average in 2015 to R3.56 in 2020.