2/28/2014 @ 12:11PM

In a sign that Brazil’s commodity players may be close to tapped out on debt, Brazil’s two largest companies, Petrobras PBR +1.28% and Vale VALE +0.72%, said they will be investing less this year.

Oil firm Petrobras will invest 9% less in 2014, for a total of R$94.6 billion.  Most of it is going to deep sea oil exploration in the pre-salt oil fields.  None of it is going to building new refineries other than Premium I and Premium II in the northeastern states of Maranhão and Ceará.

“We have no plans, not even long-term, where we can think about another refinery other than the two already being built,” Petrobras CEO Maria Graça Foster said this week.

One of their 165,000 barrels per day refineries, Comperj in Rio, is five years behind schedule and has already cost the company $13.5 billion.  Comperj will be fully operational in August 2016.  Another refinery within the Comperj complex, which has nearly double the refining capacity, won’t be ready until 2018.

Despite all of Brazil’s oil fields, Petrobras has to import gasoline from Venezuela and elsewhere mainly because it does not have the refining capacity at home.  Yet, Petrobras reduced refinery investments in their 2014-2018 plan by 40% to around $39 billion.  The market, however, has viewed this as a positive mainly because of Petrobras’ already heavy debt load of close to $94 billion compared to $72.3 billion in 2012, an increase of 31%.

Then there’s Brazilian mining company Vale.

Last year, Vale sold $6 billion worth of assets and 2014 promises more of the same, company CEO Murilo Ferreira said in a conference call on Thursday.  For Ferreira, “Our team won’t be taking a vacation this year.” He said Vale will continue reducing costs and reallocating capital to the company’s core business.

In September, Vale sold stakes in a cargo unit for $1.2 billion to Mitsui & Co.  Two months later, Vale announced an agreement to sell 20% stakes in two natural gas exploration blocks in Brazil’s Parnaiba basin to GDF Suez and sold a stake in aluminum maker Norsk Hydro for $1.82 billion.

Vale has been selling lower return assets, putting projects on hold and focusing on its more iron-ore business in a bid to boost profit margins and regain investors’ confidence.

As an investment, Vale has been kinder to shareholders than Petrobras, down 7.15% year-to-date compared to Petrobras’ slide of 18.8%. But over the last year, Brazil’s two biggest large cap stocks are equally depressing, both down more than 23%.  Wherever these stocks go, the MSCI Brazil tends to follow as both Petrobras and Vale account for more than a quarter of the Bovespa stock index.

Earlier this week, Barclays Capital said that Petrobras might have finally hit bottom. Equity analysts in New  York put a 12-month price target of $20 on Petrobras ADRs trading on the NYSE.