OREANDA-NEWS. A complex deepwater oil field figures prominently among the $12.3bn in asset impairments in Brazilian state-controlled Petrobras? 2015 results.

The company lost a record $8.6bn after taxes last year, according to the firm?s US dollar-denominated financial results issued today.

The mammoth loss highlights the impact of sharply lower oil prices, a massive corruption investigation, and challenges to the development of sub-salt deposits.

The impairments took a toll across the company?s operations, but producing assets alone accounted for $9.2bn, of which $2.2bn corresponded to the under-performing Papa Terra field in the Campos basin. The company lost $2.5bn in its upstream division in 2015.

Petrobras said the Papa Terra impairment was mainly the result of the oil price decline, but said reservoir problems at the field also contributed to the loss of value.

Petrobras holds a 62.5pc operating stake in Papa Terra. Chevron holds 37.5pc.

Production at the field has been falling since reaching 23,717 b/d of 14.6°API crude in March 2015. The field produced around 16,000 b/d of high viscosity crude in January 2016, according to oil regulator ANP.

Last year, Chevron said the "vast majority" its second-quarter 2015 $1.96bn impairment on assets stemmed from Papa Terra. The company has declined to comment on activity at the field.

In August 2015, Petrobras said it would apply polymer injection at Papa Terra in an effort to boost heavy crude production.

Papa Terra is estimated to hold around 380mn bl of recoverable oil. Chevron has pinned the development cost for the field at $5.2bn.

In a conference call today, Petrobras upstream director Solange Guedes says the consortium is working on a complete remodeling of Papa Terra. A decision on the new development plan is expected in October 2016.

Problems at Papa Terra have been factored into Petrobras' modest 2.145mn b/d domestic oil production goal for 2016, a 1pc increase over the 2.128mn b/d produced in 2015.

The company plans to produce around 2.7mn b/d in Brazil by 2020, a target pegged to the timely delivery of sub-salt production platforms.

Petrobras said it has renegotiated the contracts for 11 floating production, storage and offloading (FPSO) units earmarked for sub-salt fields through 2019.

Last year, problems with suppliers, many of which have been implicated in an extensive kickback and bribery scandal, forced the company to push back timelines for several sub-salt projects. Petrobras says most of those issues have been resolved.

The firm says the break-even price for sub-salt development is approaching $35/bl, the result of a cost reduction scheme that aims to lower supplier costs by more than 13pc. Last year, Petrobras said break-even for sub-salt projects was around $45/bl.

The company's downstream segment continues to benefit from lower international fuel prices, higher domestic price, and a fall in domestic demand. After years of accruing losses, the result of selling diesel and gasoline below import costs, Petrobras downstream segment posted a $5.7bn profit in 2015, up from a $15.7bn loss in 2014.

Refinery expansion plans have been further set back. The 165,000 b/d greenfield Comperj refinery in Rio de Janeiro originally planned to come on stream in August 2016 is now planned for 2023. The second 115,000 b/d train of the Abreu e Lima refinery originally planned for May 2015 should start operations in 2019, Petrobras says.

Petrobras plans to sell around $14bn in assets this year to help reduce its $126bn debt load and keep investment spending on track.

The company has already said it will sell stakes in onshore assets, its fuel distribution subsidiary, pipeline assets, and fertilizer units. Sales of offshore assets and two LNG terminals with associated power stations are also on offer. Negotiations to sell the company?s Argentina and Chile subsidiaries are underway.

Petrobras chief executive Aldemir Bendine says an intense political crisis in Brazil should not impact the company's plans to unload assets this year.

"The political crisis does not have an influence if you have active investor interest. What investors don't like is breach of contract. I do not think this will have an impact. …It is not for the company to worry about this political crisis, but rather to pursue improvement in our management."

Bendine said a new five-year business plan will be issued by June, and a board vote on a corporate reorganization will take place later this month.