Petrobras Has Big Goals For Lowering Labor Costs
The Brazilian state-run energy company Petróleo Brasileiro, or Petrobras (NYSE:PBR), is looking to cut labor costs as its spending on developing oil fields accelerates. Despite the relatively high oil prices of 2013, many oil companies are struggling to keep profits and revenue healthy in the face of crippling costs. Royal Dutch Shell (NYSE:RDSA)(NYSE:RDSB) — which issued a profit warning to investors on Friday — may be the most prominent example of the headwinds tugging at oil companies, but many other industry players, from BP (NYSE:BP) to Petrobras, are looking to lower costs.
On Thursday, the executive board of directors of Petrobras — a company employing 62,770 workers — approved a voluntary separation incentive plan that covers all employees over the age of 55. As the company expressly stated in the press release detailing the worker buyout, the proposal was developed as part of an initiative to “positively influence Petrobras’ productivity” so that key performance targets can be met. The voluntary separation incentive plan is meant to be a road-map to “plan and systemize the separation” of particular employees so that the “existing knowledge of the company” is preserved, knowledge that will enable the oil producer to focus on boosting productivity.
Petrobras did not specify how many workers would be targeted, but the National Oil Workers Federation told The Wall Street Journal that the oil producer wanted to cut as many as 8,500 workers from its payroll. With lower labor costs, the company would have the spare financial room to spend a planned $237 billion through 2014 on developing oil fields off the coast of Brazil. Already that development plan has put a great strain on the company’s balance sheet; because the Petrobras has borrowed a great deal to finance the project, the company’s debt has more than quadrupled to $86.5 billion.