Laden by corruption scandals and falling oil prices, Petrobras is struggling to repay $130 billion (bn) worth of debt – nearly $24bn will mature by 2017, Douglas-Westwood said in its DW Monday report.

Efforts to sell non-core assets (pipelines, powerplants, bonds etc.) have been slow going and any attempt to divest upstream operations impeded by red tape, the energy intelligence group stated.

Mandatory operatorship (30%) for Petrobras in the pre-salt basin not only limits the company’s options for raising cash from existing upstream assets but also increases the NOC’s capital outlay. DW said that foreign investment in upstream operations has been made less appealing due to Brazil’s unitization rules, which can make outside operators susceptible to additional financial risks.

According to DW, offshore Brazil was once known as a “safe haven” for oil field service companies, yet almost half of all indigenous companies are now facing insolvency issues according to KPMG (e.g. Queiroz Galvao, OGX). Macro-economic factors, inefficiencies (low quality of goods and services, failure to fulfil contract deadlines etc.) and stringent local content rules have created a number of obstacles to growth in the sector.

However, DW said, despite these challenges, new opportunities may emerge as the national government and Petrobras re-think the O&G industry’s growth strategy. In early 2016, the government launched the ‘PEDEFOR’ program – relaxing local content rulings and incorporating new financial incentives for foreign companies. The response from industry participants has been largely positive – with Aker Solutions opening another subsea manufacturing center in April 2016.

As Petrobras puts upstream assets (Bauna, Golfinho and Tartaruga fields) into the market, it appears further amendments to pre-salt requirements and licensing methods may take place. If implemented, these changes could lead to another wave of foreign investment. Drawing parallels to the mooted IPO of Saudi Aramco, NOCs are beginning to reevaluate their relationship with both national governments and foreign E&P investors.

In the current price environment, experimenting with various options and methods of collaboration is likely to be the most sensible approach to dealing with the challenges of today’s oil & gas market.