Brazil’s President Luiz Inacio Lula da Silva has fired Jean Paul Prates, the chief government of state-owned oil firm Petroleo Brasileiro SA, following a dispute over dividend funds.
The choice was confirmed by folks aware of the matter, who requested to not be recognized discussing non-public issues. Petrobras, as the corporate is usually identified, stated in a press release late on Tuesday that Prates is anticipated to formally resign at an upcoming board assembly.
Lula, because the president is understood, plans to appoint Magda Chambriard, the previous head of Brazil’s oil and fuel regulator, to exchange Prates, in line with one other individual aware of the matter. Petrobras confirmed that the Vitality Ministry had proposed her for CEO.
The corporate’s American depositary receipts dropped greater than 6% after the shut of standard buying and selling in New York following the bulletins.
Prates’s departure brings to an finish months of hypothesis that his days on the helm of Petrobras have been numbered. Tensions escalated earlier this yr when he refused to align himself with government-appointed board members who voted to withhold the payout of extraordinary dividends to shareholders who’d grown use to regular returns.
The firing might add to concern that Rio de Janeiro-based Petrobras is coming below rising strain from the ruling Staff’ Social gathering to assist revive Brazilian trade and create jobs, on the expense of shareholders. The dividend drama shocked some traders who seen it as an indication of rising political interference in Latin America’s prime oil-producing nation.
After weeks of debate, Petrobras in the end authorised returning half its out there money to traders via a particular dividend, as Prates’s government board had initially proposed. The federal government is the most important shareholder, and the dividends have helped shore up a fiscal deficit at a time spending is on the rise.
Prates informed the chief board earlier than the official announcement that Lula had requested for his place again. In a message seen by Bloomberg, he stated that his mission was “prematurely minimize brief,” blaming Alexandre Silveira, the vitality and mines minister, and Rui Costa, Lula’s chief of employees, with whom he had clashed.
A former senator for Lula’s left-wing celebration with a historical past of working within the oil trade, Prates grew to become chief government in January 2023, shortly after Lula reassumed the presidency. Petrobras had burned via six CEOs, together with interim ones, from 2019 till Prates’s appointment.
Beneath his management, Petrobras modified path, halting asset gross sales, shielding customers from sharp fluctuations in world oil costs and earmarking billions of {dollars} for vitality transition investments. The corporate just lately boosted the price range for its five-year marketing strategy to $102 billion, its largest spending plan since 2015.
Petrobras stated it obtained a discover from the Vitality Ministry late on Tuesday confirming that it could suggest Chambriard to exchange Prates.
The engineer began her profession at Petrobras in 1980, working on the firm for 22 years, earlier than transferring to Brazilian oil regulator Agência Nacional de Petróleo, Gás pure e Biocombustíveis, referred to as ANP. She was appointed head of the company by former Brazilian president Dilma Rousseff in 2012 and held the place till 2016.
Like Prates, Chambriard was a part of Lula’s transition group for vitality in 2022. At the moment, she had already been recognized as a doable candidate for Petrobras’s prime job. The previous ANP head has defended the necessity for Brazil to probe for oil in new areas, together with the Equatorial Margin and the Pelotas Basin.
“The pre-salt increase is over. It’s time to search for new frontiers, so Brazil can preserve producing oil,” she informed Bloomberg in an interview in December.
Chambriard additionally backs extra funding in home oil refining, and needs to see extra commodities processed in Brazil reasonably than exported as uncooked supplies.
The ousting of Prates marks a deterioration in Petrobras’s governance, and Chambriard’s mission gained’t be simple, Citigroup Inc. stated in a observe. She “arrives with the strain to meet the funding plan and speed up Petrobras’s capex enlargement” and this may occasionally lead to decrease dividend funds, it stated.