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From Reuters

SAO PAULO/RIO DE JANEIRO, Oct 5 (Reuters) – State-led Petróleo Brasileiro SA , struggling with the biggest debt load among global oil firms, on Monday cut $11 billion from capital spending plans for this year and next as Brazil’s currency and oil prices slump.

Petrobras, as the company is commonly known, plans to cut 2015 investment by 11 percent to $25 billion from the previous $28 billion, according to a statement. Investment for 2016 will be cut 30 percent to $19 billion from $27 billion. Budgeted costs plus operating expenses excluding purchases of raw materials were also trimmed for this year and next.

The company is being battered by a whirlwind of bad news. In the last year, oil prices dropped nearly 50 percent and Brazil’s currency, the real, slipped by a third against the U.S. dollar, causing revenue to fall and debt to soar.

Meanwhile, the downgrade of its debt rating to junk status has raised the cost of borrowing, and a giant corruption scandal has tarnished its reputation with investors.

“The company’s uncertain future is the consequence of terrible governance,” said Fabio Fuzette of Antares Capital, a Sao Paulo investment fund. “Debt is so high that they’ve sacrificed capital investment to preserve cash.”

The cuts announced Wednesday are the second round of retrenching in three months for the Rio de Janeiro-based company, which recently prided itself on having the world’s largest corporate-investment plan.

Reuters reported last month that Petrobras could be forced to make new cuts to its five-year plan, announced in late June, as the burden of falling oil prices, rising interest payments and a weak currency made the program obsolete.

Hailed as a return to reality after years of missed output goals and a giant corruption scandal that led to $17 billion of writedowns in April, the June plan cut investment 41 percent to $130 billion from $221 billion for the 2015-2019 period

Petrobras said on Wednesday that it still plans to sell up to $15.1 billion of assets by the end of 2016. Of that $700 million is expected to be raised this year.

By the end of 2019, additional asset sales and other corporate reorganizations are expected to bring that total to $56 billion, an amount double the company’s market value of $28 billion.

“You can’t look at numbers like that and think the people running this company are serious,” Fuzette said.

He warned investors against buying the company’s stock, even after it has dropped 60 percent in the last year. Those who want to invest in the company, he added, should consider buying its debt instead because he believes the government could be forced to bail Petrobras out, paying off lenders at the expense of shareholders.

Oil output goals were also kept unchanged for the 2015-2019 period, the statement said.

“I really don’t see how they can maintain their output goals while cutting spending,” said Adriano Pires, head of the Brazilian Infrastructure Institute, a Rio de Janeiro energy research group and a long-time critic of Petrobras.