9th April 2024 – Petrobras CEO Jean Paul Prates is facing intense scrutiny and potential replacement following dissatisfaction among government officials over his management of the Brazilian state-controlled oil company.
Prates has been at odds with Brazil’s Minister of Mines & Energy, Alexandre Silveira, for several months, but tensions heightened when Petrobras decided not to issue extraordinary dividends to shareholders alongside its 2023 financial results announcement.
The federal government, as the majority shareholder in Petrobras, advised its appointed board members to oppose the dividend payment, while independent board members supported the payout. Prates, who also serves on the board, abstained from voting, leading to discomfort among Silveira and Brazilian President Luiz Inacio Lula da Silva, according to reports from Brazilian news outlet G1.
Following the dividend announcement in March, Petrobras’ stock plummeted by over 10%, with investors concerned about potential government interference in the company’s operations.
The government sought to direct these additional funds towards increased investments by Petrobras to demonstrate the company’s robust financial position to the market. However, according to Petrobras’ statutory regulations, surplus funds can only be distributed as dividends.
Reports suggest that Petrobras is now considering approving the distribution of these surplus funds as dividends. However, Prates’ decision not to align with the government’s stance earlier this year has contributed to dissatisfaction among Lula and other ministers.
Lula convened a meeting on April 7 with three ministers to discuss the situation at Petrobras but later canceled the gathering. He is scheduled to meet Finance Minister Fernando Haddad later on Monday to discuss Prates’ future at the company, with Haddad supporting Prates and the additional dividend payment to bolster the government’s fiscal accounts.
Aloizio Mercadante, the head of Brazil’s national development bank BNDES, is reportedly the leading candidate to replace Prates. The two have a good rapport, and Mercadante indicated that Lula had approached him regarding the matter, as reported by Brazilian media.
Although the dividends issue has been a primary source of contention, it is not the sole reason for the backlash against Prates.
Lula and certain ministers are also dissatisfied with Petrobras’ level of investment in energy transition initiatives, despite the company’s numerous deals in offshore wind, solar power, carbon capture, and hydrogen under Prates’ leadership.
Petrobras has earmarked $11.5 billion for investments in low-carbon initiatives, accounting for approximately 11% of the company’s total $102 billion capital expenditure planned for the 2024-2028 period.
Source: G1 / Br8
For information about Brazilian maritime oil and gas logistics visit our homepage.
