* Oil price, debt, management mistakes spur 20 percent cut
* Rebound in oil prices may not restore all reserve losses
* Reduction expected but larger than anticipated (Adds reserve depletion rate 4th paragraph and certification company name, last paragraph)
By Jeb Blount
RIO DE JANEIRO, Jan 29 (Reuters) - Brazil's state-controlled oil producer Petrobras slashed its oil and natural gas reserves 20 percent on Friday, hit by a plunge in energy prices, a heavy debt load, high costs and a corruption scandal.
The bigger-than-expected cut, reported in a securities filing on Friday, highlights how the once soaring potential of big oil discoveries off the coast of Brazil have faded for Petroleo Brasileiro, as the company is formally known.
The filing showed Petrobras reduced proven reserves to 10.52 billion barrels of oil and natural gas equivalent (boe) as of Dec. 31, their lowest since 2001, according to standards set by the U.S. Securities and Exchange Commission. Petrobras booked 13.13 billion boe a year earlier.
Petrobras said its reserves now account for 11.3 years of output, down 24 percent from 14.7 years in 2014.
The announcement is one of the strongest statements yet of the sharp reversal of fortune at Petrobras. Reserves are a key factor in determining the company's ability to borrow and provide a return on investment.
"Oil prices played a big part, but Petrobras has itself to blame too," said Fadel Gheit, an oil and gas analyst with Oppenheimer Inc in New York. "It's a classic case of mismanagement and government interference. Low oil prices pushed them over the cliff, but they got to the precipice themselves."
Petrobras has spent about $350 billion on expansion in the last decade, a period when it made some of the world's largest-ever offshore discoveries. The company, though, now has less commercially viable oil and gas than it did 14 years ago, when as a cash-poor oil producer slowly but steadily increased reserves and output to reduce Brazil's crippling dependence on foreign imports.
In 2010, former Chief Executive Officer Jose Sergio Gabrielli said the company would have at least 30 billion of reserves by now.
But a nearly 70 percent decline in the price of oil in the last year and a half made many once-promising discoveries non-commercial for many oil companies.
"The magnitude of the cut was perhaps somewhat larger than the market had expected, but is mostly attributed to lower oil prices," said Luana Siegfried, analyst at Raymond James in Houston. "In the future, those barrels may come back to the balance sheet."
A rebound, though, could be limited. Even if oil doubles to about $70 a barrel much of what Petrobras owns may still be uneconomic, Gheit said.
Meanwhile, Petrobras, with $130 billion of debt, the largest in the industry, is slashing its budget. That means it is less likely to discover or develop reserves to replace current production, said John Forman, a geologist and former board member of Brazil's oil regulator ANP he said.
Asset sales of up to $15 billion planned by the end of the year to help pay down some of the debt, will also reduce the company's reserves. A price-fixing, bribery and political kick-back scandal has also undermined Petrobras' credit rating driving up the cost of future borrowing.
The government's decision to force Petrobras to focus investment on new technically-challenging offshore "subsalt" resources, where new laws directed more revenue to the central government, has driven up spending, Forman said. At the same time, he added delays in producing subsalt oil and gas have raised the rate that existing reserves are depleted.
The subsalt refers to oil and gas trapped deep as much as 7 kilometers beneath ocean and seabed by layer of mineral salts.
"It's not just prices, it's also government meddling, they expected subsalt cash to keep them in power for years," Forman said. "What did we get? In short, a disaster."
The reserves were certified by U.S.-based DeGolyer and MacNaughton. (Additional reporting by Silvio Cascione in Brasilia and Joshua Schneyer in New York; editing by Alexander Smith, Lisa Von Ahn, Diane Craft)