Petrobras CEO Seeks Lula Meeting Amid Speculation He’ll Be Fired
(Bloomberg) -- Petroleo Brasileiro Chief Executive Officer Jean Paul Prates is seeking a meeting with Luiz Inacio Lula da Silva to see if the president supports him in the role amid speculation about his departure that caused shares to swing wildly earlier Thursday.
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Prates wants Lula’s support amid continued criticism from Mines and Energy Minister Alexandre Silveira, according to two people familiar with the matter. The meeting hasn’t been scheduled yet, they said.
Local media had previously reported that Lula and Prates would meet Friday. The president is visiting cities in northeastern Brazil on Thursday and Friday, but will be back in Brasilia on Friday afternoon.
Prates’ potential departure after more than a year in the role underscores how Petrobras struggles to meet conflicting expectations from the government and minority shareholders. The Lula administration would like to see Petrobras act more as a motor for economic and job growth while shareholders had gotten accustomed to industry leading dividend payments that have gone into decline.
Prates wants to remain in the role, but is waiting on support from Lula, one person close to the chief executive said. Silveira ratcheted up his rivalry with Prates after giving an interview to a local newspaper in which he said he disagreed with the direction Prates was taking Petrobras.
There were some signs that Prates may prevail in his role. Silveira, Finance Minister Fernando Haddad and Chief of Staff Rui Costa held a meeting Wednesday and agreed that Petrobras would pay out extraordinary dividends that Prates had supported, but that were previously blocked by board members aligned with Silveira, the people said. Lula still needs to sign off on the payout, the people said.
Common shares of Petrobras, as the state-controlled oil giant is known, slumped early on Thursday after CNN Brasil, citing anonymous sources, reported that Prates’ departure was imminent. Shares then reversed losses and rose as much as 3.9% after O Globo reported the deal on the dividends. They closed 0.5% lower at 39.12 reais ($7.74).
The company issued a statement Thursday afternoon saying that no decision had been made about the dividends.
“We consider Prates’ departure, especially for political reasons, as negative news for the company,” said Ilan Arbetman, analyst at Ativa Investimentos. “What concerns us, at the moment” is that the conflict between the company and the government “could take away the company’s maneuvering power to continue executing its current pricing policy.”
Petrobras subsidized motor fuels the last time Lula’s Workers’ Party was in power, and there is concern it will start doing that again.
As questions swirled about his future, Prates played into the speculation, posting an image of a text message conversation in which someone asked if he was leaving Petrobras on social media.
“I think that after 8:02 pm he will go home for dinner,” the response read. “And tomorrow at 7:09 am he will be back at the company as he always has a full schedule.”
The head of Brazil’s Development Bank, Aloizio Mercadante, is one of the candidates being considered to lead Petrobras if the job opens, and economist Nelson Barbosa could take over BNDES, one of the people said. Mercadante’s media representative denied any invitation to lead Petrobras and said he was working normally at BNDES, according to CNN.
“There’s probably not a more thankless job in Brazil than being the president of Petrobras,” said Schreiner Parker, managing director for Latin America at Rystad Energy AS. “You’re torn between the government and market.”
--With assistance from Mariana Durao.
(Recasts lead with CEO’s request to meet with Lula, additional details throughout.)
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