Petrobras CEO Aims to Stay Until April, Sources say, Auguring Messy Transition

November 28, 2022

©Salty View/AdobeStock
©Salty View/AdobeStock

Brazilian President-elect Luiz Inacio Lula da Silva may have to wait months to implement his plans for state-run oil company Petrobras, as the chief executive appointed by the current government aims to finish his term in April, people familiar with his plans said. 

Until then, CEO Caio Paes de Andrade, installed by President Jair Bolsonaro in June to run the company known formally as Petroleo Brasileiro SA, plans to carry out the current government's strategy, said the sources, requesting anonymity to discuss private deliberations. 

The standoff could add friction to a tricky transition between the right-wing Bolsonaro government and the incoming administration of leftist Lula, whose electoral victory last month has still not been recognized by the sitting president. 

Lula has scheduled interviews this month with leading candidates to replace Andrade as Petrobras CEO, sources have told Reuters, but the formal nomination, vetting, board approval and shareholder vote could drag on for months after his Jan. 1 inauguration. In the meantime, the company's new five-year business plan, to be released on Nov. 30 by current management, will show little change in strategy, sources said, with around $70 billion of investments in the updated plan. 

Lula and his advisers have argued that Petrobras should boost investments in renewable energies and refineries, end an asset sale program and stimulate more regional development. But sources say Andrade has no intention of backing off asset sales outside the core offshore oil and gas business, even as Lula's transition team has called to suspend such deals. 

"Caio has said that he will go until the end (of his term) and that he will always do what is best to generate more value for Petrobras shareholders," said one of the sources. Another source said Andrade is not expected to leave before April, even if he eventually comes under pressure to do so. 

To install a new CEO without Andrade's resignation, Lula's government will have to appoint its candidate to a board seat, get approval from a shareholder meeting where it has a majority of votes, and then let the board choose the CEO from its ranks. Bolsonaro, who swapped the CEO of Petrobras three times amid disputes over fuel pricing, has not conceded defeat to Lula, although his chief of staff said he has authorized the formal transition process. 

(Reuters * Reporting by Rodrigo Viga Gaier and Marta Nogueira/Aditional reporting by Sabrina ValleWriting by Ana Mano/Editing by Brad Haynes and Marguerita Choy)



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