Petrobras moves on from leadership fiasco with new chief

Brazilian oil major Petrobras sought to end weeks of turmoil on Thursday by appointing a new chief executive, after two previous bosses were removed within a year following tensions with President Jair Bolsonaro.

The state-controlled company said its board had elected José Mauro Coelho, a public sector official specialising in the energy sector, as chief executive for a one-year term.

Investors will hope his arrival will end a fiasco over leadership of the $90bn group, which has become a political target over rising fuel costs.

Coelho’s predecessor, reserve army general Joaquim Silva e Luna, spent just a year in post before being ousted by the government. He had incurred Bolsonaro’s wrath by refusing to hold down diesel and petrol prices, a sore point for the rightwing leader ahead of presidential elections in October as inflation runs in the double digits.

With just over half of voting rights in Petrobras, Brasília in effect decides the top job.

Economist Adriano Pires was initially named as Silva e Luna’s replacement, but he later withdrew over potential conflicts of interest. The government nominated Coelho in his stead last week.

Coelho, regarded as a technocratic choice, was previously secretary of petroleum, gas and biofuels at the ministry of mines and energy. He was most recently chair of a government entity that manages deep-sea oil exploration contracts.

“José Mauro brings greater knowledge of the oil sector,” said Marcelo de Assis, head of Latin America upstream research at consultancy Wood Mackenzie. “We do not expect any revolutionary changes at this time.”

Márcio Andrade Weber was also approved this week as Petrobras’s chair, after the government’s initial pick pulled out amid allegations of possible conflicts of interest. An engineer who worked at Petrobras for 16 years, he was already a member of its board.

A concern for shareholders is whether Petrobras’s revamped management will maintain its policy of setting domestic fuel rates in line with international levels.

Both Bolsonaro and his main rival for the presidency, former leftist president Luiz Inácio Lula da Silva, have railed against the practice, as Russia’s invasion of Ukraine has pushed oil prices higher.

The political attention on the company has stoked memories of past state interference in Petrobras, which was at the centre of a corruption scandal in the previous decade and lost billions of dollars after being forced to keep fuel prices artificially low.

Gustavo Cruz, a strategist at RB Investimentos, said he did not believe the pricing policy would change under Coelho.

“Perhaps what is required of him is a more open and direct communication to the government about when prices will change and the frequency,” he added.

São Paulo-listed ordinary shares in Petrobras were down slightly on Thursday. The stock has gained 8 per cent this year, underperforming the local Bovespa equity index. The Rio de Janeiro-headquartered business reported record profits and dividends for 2021.