RIO DE JANEIRO (Reuters) -Shares of Brazil’s Petrobras plunged XX% as markets opened on Wednesday, after the state-run oil firm said its chief executive would step down, to be replaced by a former regulator with views closer those of President Luiz Inacio Lula da Silva.
Industry analysts expressed concern, as CEO Jean Paul Prates was seen as balancing the market demands for disciplined capital spending and healthy dividends with political demands to stabilize fuel prices and invest in job-creating sectors.
“It was unnecessary, because Jean Paul Prates was doing a very reasonable job,” said Frederico Nobre, chief equities analyst at Warren Investimentos.
Prates lasted less than a year and a half on the job – the fourth Petrobras CEO dismissed in about as many years for political reasons. His firing raises fresh fears that Petrobras will be used as a tool to fire up the Brazilian economy at the expense of minority shareholders.
Jefferies analysts said the CEO swap “appears to be an escalation of the push to intervene in the company,” in a note to clients downgrading Petrobras from “buy” to “hold.”
The ouster of Prates represents a win for members of Lula’s cabinet pushing for lower fuel prices, smaller dividends and more capital spending to create jobs and boost the economy.
In his place, the government appointed Magda Chambriard, a former head of Brazilian oil and gas regulator ANP under the previous Lula’s Workers Party administration.
After Lula was elected in 2022, Chambriard was considered for the role of Petrobras CEO, and in an interview echoed many of Lula’s views on how the firm should be run – arguing for lower dividends to investors, to free up cash for investments.
(Reporting by Fabio TeixeiraAdditional reporting by Peter Siqueira and Gabriel Araujo in Sao PauloEditing by Brad Haynes)
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