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Petroleo Brasileiro SA’s perceived creditworthiness is “deteriorating on concern the state-run oil company’s production will falter as it scales back drilling to offset losses sparked by Brazil’s fuel subsidies,” Bloomberg reported Monday.

The cost to protect Petrobras’s debt against non-payment rose again last week.

Oil and gas services company Halliburton expects Petrobras to reduce its drilling fleet in 2014 to cut expenses, adding to perception of heightened credit risk in the Brazil state-owned firm.

Petrobras had set a goal to double production by 2020. The drilling cutback threatens that plan.

The company’s refining and supply unit lost $35 billion since 2011 when it began subsidizing imports under the government’s anti-inflation program.

“It’s proof that the company isn’t doing what it is supposed to be doing,” Russell Dallen, the head trader at Caracas Capital told Bloomberg. “Bond investors and oil company investors are worried about how things are being done.”