This article first appeared in The Edge Financial Daily, on January 29, 2016.

RIO DE JANEIRO: Brazil’s Petrobras was to announce job cuts yesterday, two sources told Reuters on Wednesday, with one saying 30% of managerial staff could be axed, as the state-run oil company battles to cut costs in the face of a crash in oil price and a corruption scandal.

Petroleo Brasileiro SA, as the company is formally known, had earlier on Wednesday invited reporters to a press conference yesterday, but did not say what it would be about.

“The idea is to cut about 30% of management. So many managers is an expense which imprisons the firm,” said a senior company source who asked to remain anonymous.

Petrobras is in the midst of curbing investments and trying to sell assets as it tries to pay down its massive debt load and adjust to a lower oil price. Brent crude closed at US$33.10 (RM139.35) a barrel on Wednesday, about a third of its price in 2014.

“The job is to adapt the size of the company to be more in line with the reality of the market. The cuts could be bad for people, but is good for the health of the company,” said a second company source who also asked for anonymity.

A study into streamlining Petrobras began last year, but was accelerated due to the continuing deterioration of the company’s finances. Earlier this month the company cut its five-year spending plan for the third time in just over six months, reducing it by a quarter to US$98.4 billion. — Reuters