Brazil’s President Luiz Inacio Lula da Silva removed Jean-Paul Prates, CEO of Petrobras SA, and one of his senior subordinates after months of disagreement.
Prates was officially fired during a board meeting, and Sergio Caetano Leite was also fired as chief financial officer of the business. Petrobras is nominating Magda Chambriard, formerly Brazil’s oil and gas regulator, to succeed Prates. Clarice Coppetti will serve as a temporary chief executive officer. She is currently the executive director of corporate affairs.
The announced dividend distribution for Petrobras was smaller than anticipated, disappointing investors and leading to a broad crash across Brazilian assets on March 8. The preferred shares of the company fell as high as 8.3% in Sao Paulo, which was the worst intraday slide since then. The termination may heighten fears that the governing Workers’ Party is putting more pressure on Petrobras to prioritize the needs of Brazilian industry and job creation above those of its shareholders. Some investors were taken aback by the dividend drama, seeing it as an indication of increasing political meddling in the leading oil-producing country in Latin America.
While Prates was at the helm, Petrobras reversed course, investing billions in energy transition initiatives, protecting customers from wild swings in global oil prices, and freezing asset sales. The corporation has just increased its spending forecast for the next five years to $102 billion, its most extensive expenditure plan since 2015.
At the end of Tuesday, the Energy Ministry notified Petrobras that it would recommend Chambriard to succeed Prates. The engineer began her professional journey in 1980 with Petrobras and remained there for 22 years before transferring to ANP, the Brazilian oil regulator. Former Brazilian president Dilma Rousseff named her director of the agency in 2012, and she remained in that role until 2016.
The removal of Prates signifies a decline in Petrobras’s leadership, and Chambriard’s task will not be simple.
Citigroup said in a memo that Chambriard arrives under pressure to fulfill the investment plan and accelerate Petrobras’s capex expansion, which may lead to reduced dividend payments.
