Brazil’s Petrobras swaps CEOs amid political blowback on fuel prices

Jose Mauro Coelho, CEO of Brazilian state-owned oil firm Petrobras, attends a signing ceremony of a contract for pre-salt oil fields with Brazil’s Minister of Mines and Energy, Bento Albuquerque (not pictured) on the headquarters of the Ministry of Energy in Brasília, Brazil, April 27, 2022. REUTERS/Andressa Anholete NO RESALES. NO ARCHIVES

SAO PAULO, June 20 (Reuters) – The chief government of Brazilian state-run oil firm Petrobras resigned on Monday within the face of mounting stress from politicians following a fuel worth hike final week, with a high-ranking firm insider rapidly tapped to switch him on an interim foundation.

Petroleo Brasileiro SA (PETR4.SA), as the corporate is formally recognized, stated in a securities submitting that CEO Jose Mauro Coelho had resigned on Monday morning. In a separate submitting, it stated that Chief Exploration and Production Officer Fernando Borges had been appointed interim CEO till a brand new boss is elected by shareholders.

Preferred shares within the firm fell 5% shortly after the resignation announcement, however rapidly snapped again to commerce roughly flat following Borges’ appointment.

Borges will change into Petrobras’ fourth CEO since Brazilian President Jair Bolsonaro took workplace in 2019. Coelho had succeeded Roberto Castello Branco and Joaquim Silva e Luna, each ousted after disagreements with Bolsonaro on the corporate’s fuel pricing coverage.

While political interference and excessive turnover at Petrobras is a serious investor concern, analysts stated Coelho’s departure was largely priced in, as Bolsonaro had introduced in May his intention to push Coelho out.

Borges, who was appointed by the corporate’s market-friendly board till shareholders can vote on a extra everlasting substitute, has way more technical experience than many different names which have been floated for the place.

An engineer by coaching with an MBA from the Federal University of Rio de Janeiro, Borges has labored at Petrobras for some 38 years, largely within the firm’s hyper-profitable offshore division, based on Petrobras’ web site.

ONGOING UNCERTAINTY

On Friday, after Petrobras stated it was elevating gasoline and diesel prices at its refineries, Lower House Speaker Arthur Lira known as for Coelho’s resignation and Bolsonaro known as the worth hike a betrayal of the Brazilian folks. read more

Bolsonaro, who faces an uphill re-election bid in October amid excessive inflation and elevated fuel prices, additionally stated he and Lira had mentioned opening a congressional investigation into Petrobras’ board of administrators.

Matheus Spiess, an economist at Empiricus, stated the transfer was “clearly adverse.”

“We’ve already had these shocks throughout Bolsonaro’s authorities, however currently they’ve been fairly disturbing,” Spiess stated.

But Ilan Arbetman, an analyst at Ativa Investimentos, stated the transfer could help Petrobras’ shares by lowering political stress on the agency and assuaging ongoing uncertainty.

Coelho was appointed CEO by the federal government in early April, however lower than two months later the Bolsonaro administration stated it was changing him with financial system ministry official Caio Mario Paes de Andrade.

Andrade, nonetheless, may solely take over after being elected to Petrobras’ board of administrators, a comparatively convoluted and complicated course of. Coelho had till Monday stayed on in a lame duck capability.

According to Petrobras, Coelho has additionally resigned as board member.

Separately, Petrobras stated on Monday {that a} board member had taken the private initiative to counsel a 45-day freeze on fuel prices in return for the federal government to withdraw its proposed shakeup of the corporate’s board and administration.

Petrobras stated that the board member’s suggestion in a June 17 letter had not been formally mentioned on the agency.

Reporting by Gabriel Araujo
Additional reporting and writing by Gram Slattery
Editing by Brad Haynes and Marguerita Choy

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