The tension between Brazil’s federal government and Petrobras, the state-controlled oil and gas giant, has reached a boiling point as CEO Jean Paul Prates steps down amidst a clash of interests between the government and minority shareholders.
The decision not to pay extraordinary dividends earlier this year led to a rift between Prates and President Luiz Inácio Lula da Silva, with Lula defending the move by calling the market a “voracious dinosaur.” This decision caused Petrobras’ shares to plummet, prompting Lula to inform Prates of his dismissal personally, according to local newspaper O Globo.
Prates, a former senator for the ruling leftist Workers’ Party, will be replaced by Magda Chambriard, a former director of Brazil’s oil and gas regulator ANP. Chambriard is seen as having a more nationalist vision, focusing on Petrobras serving national interests over those of shareholders. This contrasts with Prates’ more pro-market approach, which prioritized value creation for the company.
The company’s shares initially dropped by 9% following the announcement of Prates’ departure, before stabilizing with a 7% decline by Wednesday afternoon. Chief Financial Officer Sergio Caetano Leite will also be stepping down, with Carlos Alberto Rechelo Neto appointed as interim finance executive manager until a new CFO is elected by the board of directors.
The power struggle between the government and private investors in Petrobras highlights the complex dynamics at play in one of Brazil’s largest and most influential companies. The outcome of this leadership change will undoubtedly have far-reaching implications for the future direction of the energy giant.
