Petrobras Resists Brazil Gov't Calls to Reverse Asset Sales

Peter Frontini and Marta Nogueira
Thursday, March 30, 2023

The board of Brazil's state-run oil firm Petrobras on Wednesday resisted pressure from the government to reverse asset sales, citing its obligation to follow a multi-year strategic plan and respect existing contracts. 

Brazil's Mines and Energy Ministry sent a letter earlier on Wednesday formally calling on the company to reconsider divestments contracted by its former management.

Petroleo Brasileiro SA, as the state firm is formally known, replied in a securities filing that its incoming management may reconsider its five-year strategic plan, but that would not mean revisiting asset sales already under contract.

President Luiz Inacio Lula da Silva, who took office in January, has long criticized the recent Petrobras strategy of selling assets to streamline its focus on offshore oil fields. He has vowed to use the company to promote regional development and accelerate use of renewable energies.

Earlier this month, Petrobras management said it found no grounds to suspend asset sales under contract, after a government request to halt all its divestitures for 90 days.

The ministry insisted on the matter Wednesday, citing the arrival of a new management team appointed by CEO Jean Paul Prates, requesting that Petrobras take "the necessary measures for a better evaluation of the issue."

The company's new management was formalized on Wednesday, while its board is set to be renewed in late April. A new board, more aligned with its new executives, could spur broader strategic changes at the company. 

Last week, Petrobras had already said that the sale of the Bahia Terra oil cluster was being reassessed as it had not reached a final signature.

(Reuters - Reporting by Peter Frontini in Sao Paulo and Marta Nogueira in Rio de Janeiro; Editing by Angus MacSwan and Stephen Coates)

Categories: Energy Activity South America Regulations

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