Top Petrobras executives quit in corporate rebuke

Market: Crude oil, Oil products
24/03/21

Four senior executives of Brazil's state-controlled Petrobras have decided to step down ahead of next month's arrival of a new chief executive appointed by President Jair Bolsonaro.

Chief financial officer Andrea Almeida, logistics director Andre Chiarini, upstream director Carlos Alberto Pereira de Oliveira and production director Rudimar Lorenzatto decided not to renew their employment contracts, effectively following chief executive Roberto Castello Branco out of the company.

The mass departures are a rebuke by the company's professional managers of Bolsonaro's surprise appointment in February of Joaquim Silva e Luna as chief executive.

Currently head of the Itaipu hydroelectric complex, Silva e Luna is a former army general and defense minister with no oil industry experience.

He will come aboard just as Petrobras is advancing refinery sales, the first of which was approved earlier today. But with Brasilia scrutinizing the company's market-based fuel pricing policy amid perceptions of a managerial vacuum, the asset sales look less certain.

The four departing executives informed the company they will not seek an extension of their two-year contracts past their 20 March expiry, but Brazilian law automatically extends the term of executive directors until the next shareholder meeting, which is scheduled for 12 April, Petrobras said today.

Thin ranks

The departures mean that only a few senior executives will carry over from Castello Branco's technocratic two-year tenure, including recently appointed downstream director Rodrigo Costa Lima e Silva.

Late on 19 February, Bolsonaro shocked investors by naming Silva e Luna to replace Castello Branco, reviving a past record of political meddling into fuel pricing. The company has been pricing gasoline and diesel on a market basis since 2016, sparking a popular backlash.

The bombshell appointment caused Petrobras shares to plummet. Since then, Silva e Luna has tried to reassure investors he is not beholden to Brasilia.

Under Castello Branco, Petrobras has been downsizing to become a leaner, mostly upstream company focused mainly on pre-salt oil production. The firm is currently in the process of selling around half of its 2.2mn b/d of domestic refining capacity. Petrobras' board today approved the $1.65bn (R9.1bn) sale of the 333,000 b/d Landulpho Alves refinery (RLAM) to Abu Dhabi's state-owned investment fund Mubadala.

The management turmoil in Petrobras coincides with a sharp surge in Covid-19 infections across Brazil, where Bolsonaro regularly plays down the gravity of the pandemic. The recent resurfacing of his political foil, popular former president Luiz Inacio Lula da Silva, adds another layer of uncertainty to Brazil's investment climate.

By Nathan Walters

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