Shares of Brazil’s state-owned oil company Petrobras Petroleo Brasileiro SA (Petrobras) have dropped after President Luiz Inacio Lula da Silva fired CEO Jean Paul Prates following a dispute over dividend payments.
Petrobras said in a statement on 14 May that Prates is expected to officially resign at an upcoming board meeting. The decision comes after months of tension after Prates refused to align himself with government-appointed board members who voted to withhold the pay-out of extraordinary dividends to shareholders. After weeks of debate, Petrobras ultimately approved returning half its available cash to investors through a special dividend, as Prates’ executive board had initially proposed. The government is the biggest shareholder, and the dividends have helped shore up a fiscal deficit at a time spending is on the rise.
Petrobras said it received a notice from the Energy Ministry late on Tuesday 14 May confirming that it would propose Magda Chambriard to replace Prates. The engineer started her career at Petrobras in 1980, working at the company for 22 years, before moving to Brazilian oil regulator Agência Nacional de Petróleo, Gás natural e Biocombustíveis, known as ANP. She was appointed head of the agency by former Brazilian president Dilma Rousseff in 2012 and held the position until 2016.
Like Prates, Chambriard was part of Lula’s transition team for energy in 2022. At that time, she had already been identified as a possible candidate for Petrobras’s top job. The former ANP head has defended the need for Brazil to explore for oil in new areas, including the Equatorial Margin and the Pelotas basin.
“The pre-salt boom is over. It’s time to look for new frontiers, so Brazil can keep producing oil,” she told Bloomberg in an interview in December.
Chambriard also backs more investment in domestic oil refining, and wants to see more commodities processed in Brazil rather than exported as raw materials.
The ousting of Prates marks a deterioration in Petrobras’s governance, and Chambriard’s mission won’t be easy, Citigroup Inc. said in a note. She “arrives with the pressure to fulfill the investment plan and accelerate Petrobras’s capex expansion” and this may result in lower dividend payments, it said.
