Brazil: Earthquake in Petrobras Leadership

Magda Chambriard, the former head of Brazil’s oil and gas regulator, has become the new CEO of Petrobras, Brazil’s state-controlled oil company.

Brazilian President Luiz Inácio Lula da Silva’s decision to replace outgoing CEO Jean Paul Prates with Chambriard was announced by the Ministry of Mines and Energy and will now be presented to the company’s Board of Directors.

Lula decided to fire Prates because of a disagreement over dividends the company wanted to pay to private shareholders for just under half of its capital. A choice that has not been well received by the Brazilian government, which has pushed for lower fuel prices, lower dividends, and more capital spending to create jobs.

On April 25, the company ordered the payment of 22 billion reais (about 4 billion euros) as extraordinary dividends for fiscal year 2023. According to a report by Italian news agency ANSA, another 22 billion will be set aside in a fund to guarantee the payment of future dividends.

Since Prates has been at the helm of Petrobras (January 2023), there has been repeated friction with Energy Minister Alexandre Silveira, who believes the company has done too little to control gas station prices and help the Brazilian economy with investment. The concern is shared by Lula himself.

Tensions peaked in March when the board of directors, largely appointed by the minister himself, decided to suspend dividends for the sake of additional profits. A fact that led to huge losses in the stock market, just as it did after Prates was fired. This dynamic, according to analysts, reflects investors’ fears of government intervention in Petrobras.