Petrobras share prices crash amid CEO swap

Petrobras shares plummeted almost 6 percent on the Brazilian stock market a day after the abrupt announcement of chief executive Jean Paul Prates’s dismissal. 

In the first hours after the bell, the share prices were down by roughly 8.5 percent. Petrobras’ American Depositary Receipts (securities traded on the New York Stock Exchange) also opened the day down by more than 8 percent. For about half an hour, negotiations were suspended. 

Mr. Prates fell after losing a political battle with Mines and Energy Minister Alexandre Silveira and Chief of Staff Rui Costa — who want more government control over the state-controlled oil major.

Mr. Prates tried to balance the demands of the government, the company’s controller, and minority shareholders. In May 2023, months after taking over the company, Mr. Prates announced the end of international parity as the main factor in the company’s pricing policy. 

The change not only opened space for cuts in fuel prices but also for the company to once again compete in refining, given the Lula administration’s monopolistic drive in this market — the company controls 84 percent of the country’s refining capacity. 

The first cut in fuel prices came in August, but they continue to lag behind the international market. Still, the government constantly complains that fuels at the pump are not cheap enough.

More recently, disagreements between the government and shareholders surrounding the dividend distribution policy and Petrobras’ investments contributed to Mr. Prates’ defeat.

In March, the government got the board to approve the non-distribution of the company’s extraordinary dividends and the creation of a reserve fund, which would cover possible losses. On the day the decision was announced, the company lost more than BRL 55 billion in market value. 

Mr. Prates publicly opposed the retention of the extraordinary dividends and abstained from a vote in which government-appointed board members rejected a proposal to pay the extraordinary dividends that minority shareholders were expecting. 

At the time, Mr. Prates revealed the decision not to distribute the dividends had been “guided” by the government. In April, after pressure from shareholders and the market, the company’s board reviewed the decision and approved the distribution of around BRL 22 billion (USD 4.2 billion) in extraordinary dividends relating to Q4 2023 — about half of the total.

Mr. Prates was fired on Tuesday night in the presence of Mr. Silveira and the Institutional Relations Minister, Rui Costa, two of the figures who most represent the Lula administration. Mr. Prates interpreted the gesture as a humiliation. 

The government appointed Clarice Coppetti, Petrobras’s executive director of corporate affairs, to take over the company on an interim basis. The Lula administration also appointed Magda Chambriard, former president of the National Oil Agency during Dilma Rousseff’s administration, to replace Mr. Prates. 

However, her name still needs to go through the company’s due diligence before it can be approved by the board.

Ms. Chambriard met with Mr. Silveira on Wednesday. Experts say she needs to work to recover the company’s autonomy and credibility, but this is not part of the federal government’s plans. She will be the company’s sixth president in six years, which says a lot about the level of political interference in the organization since the former Jair Bolsonaro administration.

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