Lula appoints new CEO and tasks him with investing in oil and natural gas refineries
Brazilian President Luiz Inacio Lula da Silva has named Magda Chambriard as the new CEO of Petroleo Brasileiro SA (Petrobras), pushing her to accelerate investments in refineries and natural gas expansion, according to anonymous sources who spoke to Bloomberg . Employment comes much first
This leadership change follows Lula's firing of former CEO Jean Paul Prates, due to dissatisfaction with his management of the company's strategic plan.
Chambriard's appointment raises investor concerns about greater government intervention in Petrobras, as Lula's administration seeks to leverage the state oil giant to shore up Brazil's sluggish economy. Key areas of focus include the $17 billion earmarked for refinery investments and the $9 billion earmarked for natural gas and alternative energy projects under Petrobras' five-year, $102 billion plan.
Energy Minister Alexandre Silveira, a critic of Prates, forwarded Lula's directives to Chambriard, underlining the need to accelerate investments . Chief of Staff Rui Costa echoed this sentiment, underlining the President's desire to accelerate Petrobras' investment activities.
The transition also includes discussions on Petrobras' fuel pricing policy and its exploration plans in the environmentally sensitive Equatorial Rim near the mouth of the Amazon River. The new CEO's alignment with the Lula administration has heightened investor concerns, given his previous role as head of Brazil's oil regulator under former President Dilma Rousseff.
Despite its close ties to the Government, Chambriard will face significant challenges in balancing the interests of private shareholders, Government directives and consumer sensitivity to changes in fuel prices. Refinery expansions in the region are notoriously prone to delays and cost overruns, complicating the push for rapid investment execution.
Chambriard's agenda includes managing Petrobras' role in petrochemical producer Braskem, of which the company is the second-largest shareholder. The potential acquisition of Novonor's stake in Braskem remains a controversial issue, with Lula calling for Petrobras to strengthen its petrochemical activities.
Additionally, Petrobras is negotiating its return to management of the Acelen refinery in Bahia, which was sold to Abu Dhabi's Mubadala in 2021. The discussions aim to establish a new business model by mid-2024.
Petrobras continues to be a focal point of controversy within the Brazilian government, balancing ambitions to increase oil production with environmental goals. Exploration plans in the Equatorial Rim have sparked internal disputes, particularly with Environment Minister Marina Silva, a key figure in Lula's climate agenda.
Chambriard, an engineer with experience at Petrobras since the 1980s, supports the view that increasing production from equatorial deposits is vital to finance Brazil's energy transition efforts. As he takes on his new role, Chambriard will need to navigate these complex challenges, balancing Government ambitions with the operational and financial realities of Latin America's largest oil producer.
However, it is clear that Lula's Brazil, despite official declarations, places the economic viability of Petrobras at the top of its priorities, far above the expectations of environmental protection or the energy transition. The Brazilian president is much more interested in the financial flows generated by the company and the jobs in the refineries, if only for political reasons, rather than environmental objectives.
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The article Lula names the new CEO and instructs him to invest in oil and natural gas refineries comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/lula-nomina-il-nuovo-ceo-e-lo-incarica-di-investire-in-raffinerie-di-petrolio-e-gas-naturale/ on Fri, 17 May 2024 06:00:44 +0000.