Petrobras revenue crunch hits service firms

Petrobras crunch: Suppliers say payments slowing from Brazil giant

AFP/Scanpix

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News Wires

 31 January 2013 18:11 GMT

Difficulties caused by fuel subsidies, project delays and soaring costs at Brazil's state-led giant oil company Petrobras are spreading to the wider economy, undermining the company's suppliers and raising credit risks, a report said.

To fight cost overruns on its $237 billion, five-year expansion plan, limit rising debt and make up for the more than $8 billion in refining-unit losses, Petrobras is squeezing suppliers and investors by making them wait longer to receive payment, Reuters reported.

The delays have hurt Brazil's struggling oil equipment and service industry, a sector the government has sought to encourage.

With an eye on giant new offshore oil reserves, President Dilma Rousseff wants to keep as much of the hundreds of billions of dollars budgeted for ships, platforms and pipelines at home…

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