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Petrobras shares plummet as Lula changes CEO and CFO
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By Fabio Teixeira, Marta Nogueira and Rodrigo Viga Gaier
RIO DE JANEIRO (Reuters) -Petrobras announced the departure of its CEO and chief financial officer on Wednesday, and shares plunged on news that a former regulator with views closer to those of President Luiz Inácio Lula da Silva will take over. state command- run an oil company.
Along with confirming the departure of CEO Jean Paul Prates after months of intense speculation about his management, the company said in a statement that CFO Sergio Caetano Leite was also out.
Prates lasted less than a year and a half in the position – the fourth Petrobras CEO fired in almost the same number of years for political reasons. His dismissal raises new fears that Petrobras will be used as a tool to boost the Brazilian economy at the expense of minority shareholders.
Petrobras’ preferred shares fell 6% in midday trading, the biggest loss on Brazil’s benchmark stock index.
Industry analysts expressed concern, as Prates was seen as balancing market demands for disciplined capital spending and healthy dividends with political demands to stabilize fuel prices and invest in job-creating sectors.
“It was unnecessary, because Jean Paul Prates was doing a very reasonable job,” said Frederico Nobre, chief equity analyst at Warren Investimentos.
Jefferies analysts said the CEO change “appears to be an escalation in pressure to intervene in the company”, in a note to clients downgrading Petrobras from “buy” to “hold”.
Prates’ removal represents a victory for members of Lula’s cabinet who have been pushing for lower fuel prices, smaller dividends and more capital spending to create jobs and boost the economy.
“We see this as negative, as we believe it increases uncertainty in Petrobras’ investment case amid a period of stability, especially with regard to capital allocation,” Santander analysts said in a note to clients.
Prates played down those concerns as he left Petrobras’ headquarters in downtown Rio de Janeiro, telling journalists the company is in good shape. He said the company has a solid path ahead with reindustrialization, a good fuel pricing policy and planned investments in refining, fertilizers and shipbuilding.
In Prates’ place, the government appointed Magda Chambriard, former head of Brazil’s oil and gas regulatory agency, ANP, during the previous administration of Lula’s Workers’ Party.
Petrobras workers’ union FUP, linked to Lula’s party, praised Chambriard’s appointment, saying the future CEO shares the group’s vision on the need to strengthen the Brazilian shipbuilding industry and expand local refining capacity.
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After Lula was elected in 2022, Chambriard was considered for the role of CEO of Petrobras and, in an interview, echoed many of Lula’s views on how the company should be run – advocating lower dividends to investors to free up money for investment.
Until Chambriard took over, the company’s board of directors named Clarice Coppetti, executive director for corporate affairs, as interim CEO.
Carlos Alberto Rechelo, executive finance manager, will serve as interim CFO, Petrobras said in its securities filing.
(Reporting by Fabio Teixeira, Marta Nogueira and Rodrigo Viga Gaier in Rio de Janeiro; Additional reporting by Peter Frontini and Gabriel Araujo in São Paulo; Editing by Brad Haynes, Michael Erman and Marguerita Choy)