Brazilian oil giant Petrobras has inked a credit facility amounting to $4.35 billion which is expected to mature five years from now. According to Petrobras the credit facility has been made possible by a syndicate consisting of 17 banks. Some of the big financial institutions involved in the facility include Standard Chartered, Deutsche Bank, Morgan Stanley, JPMorgan Chase, Bank of China, Bank of America, Credit Agricole and BNP Paribas.
Using the instrument Petrobras will be able to make withdrawals between now and until there is a month remaining for the facility to mature. According to the Brazilian oil giant the facility did not violate the company’s existing liability management strategy. In a plan issued for the period between 2018 and 2022, Petrobras has a deleveraging goal and aims to cut costs.
“This contract creates yet another cash availability alternative for the company to use according to its needs. As such, Petrobras may use its cash for early repayment of current debts, allowing for the reduction of the carrying cost of debt,” a statement from Petrobras read.
This comes in the wake of Petrobras beginning the binding phase as it prepares to dispose of its entire stake in Petrobras Africa, its subsidiary. Petrobras Africa was formed to take part in the offshore oil exploration efforts of Nigeria where the Agbami and Akpo producing fields are located. These deepwater oil blocks are operated by both Chevron and Total SA. The binding phase will see the Brazilian oil giant instructing investors who are interested on how to approach conducting due diligence as well as how binding proposals should be presented.
In order to reduce its debt burden Petrobras has made a commitment of selling assets worth approximately $21 billion. The debt reached its highest level four years ago and has been on a gradual decline since then. Last year in September the net debt of the Brazilian oil giant stood at a little over $88 billion.
As Petrobras divests from Petrobras Africa the Brazilian oil giant has at the same time announced that it will make an investment of $42 million in a refinery located in Cubatao, which is about 40 kilometers away from Sao Paulo. The investment will be to ensure that the efficiency of the oil refining facility is improved. The daily processing capacity of the refinery is 27 million liters. This is about 8% of the overall refining output of South America’s biggest economy.