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Is Petrobras a Buy Amid This Latest News?

Is Petrobras a buy? Last week, Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) announced that operations in Colombia will be reduced. At the same time, the US spying scheme turned public, and in response the firm is expected to invest R$4 billion in information technology. The decision was communicated by Petrobras’ CEO, Maria das Graças Silva Foster to the Senate last September 18th, arguing that at Petrobras “from the moment we arrive at the company, we have a culture of information security.”

Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR)

The hearing was sponsored by the Senate and joined by the Parliamentary Commission for the Espionage Inquiry, and the Economic Affairs and Foreign Relations committees. The members present make a clear statement that the spying issue has been taken seriously. At the same time, it cannot be denied that the reunion is a clear response to the security violation suffered at the hands of US spying agencies. And, the Brazilian government will try to work around international repercussions while taking care of its economy.

Ms. das Graças made an effort to prove to government officials that information security efforts have been carried out for some time now, and how those efforts respond to a comprehensive security policy. For example, references were made to the amount of digital communications blocked. Also noted was the existence of a Data Processing Center where sensitive information is stored, and the methods employed by the agency were referenced as well. At last, the CEO explained to government authorities the ways and means for external contracts, and confidentiality agreements signed with external partners.

Amid all efforts, Ms. das Graças could not escaped being asked by public allegations made concerning security breaches by the US National Security Agency. To that inquiry, the CEO responded that company systems have identified no violation. The statement, however, ignores the fact that the NSA may actually hold enough technology to avoid being detected while carrying out its spying activities. For the same reason, enquiring governments questioned the CEO about the safety of the Libra auction to be held next October 21st. Petrobras’ CEO responded the plan should continue ahead as scheduled. Is Petrobras a buy? We’ll continue watching to answer this question.

Disclosure: Jodor Jalit holds no position in any of the mentioned stocks.

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