Petrobras Management Under Political Attack, CEO Prates Says

2023-08-01 02:21

Petrobras’ chief executive officer is pushing back on critics within the Brazilian government, saying the state-owned oil giant

Petrobras’ chief executive officer is pushing back on critics within the Brazilian government, saying the state-owned oil giant is facing a “rampant” but “ineffective” campaign to destabilize its management.

In a social media post, CEO Jean Paul Prates denied accusations that he hasn’t been clear about Petrobras’ plans to explore the Equatorial Margin, an offshore region considered to be the most promising drilling area left in Brazil. The project has been “emphatically and diligently defended,” Prates said on X, the social media site formerly known as Twitter.

“As in other matters, people try to create a crisis where there is none,” Prates said. In May, Brazil’s environmental authority rejected the company’s request to drill its first well in the area.

President Luiz Inacio Lula da Silva and some groups at his party would be dissatisfied with Prates’ administration, which should be more strongly aligned with the government’s economic agenda to fight inflation and boost the industrial activity, local media reported last week.

According to Estadao newspaper, president Lula would be considering to change the state-owned company’s management. Speculation on possible changes on Petrobras’ management and other rumors on the topic “are unfounded”, according to a government’s spokesman.

The Mines and Energy Minister Alexandre Silveira has been clashing with Prates, criticizing the company for devoting too much gas to aiding crude production, instead of increasing output and reducing prices. Last month the company announced a 7.1% price reduction in natural gas that begins in August.

Brazil’s oil workers union FUP issued a manifest in support of Prates last week, praising changes to the company’s fuel-pricing policy and the halt of a divestment program. The document said the CEO and its board have been under constant attack from opponents who want the return of a strategy focused on deep water oil exploration only and a pricing policy following the international benchmarks.

On Friday, Petrobras approved a new dividend policy that curbs payments to 45% of free cash flow. During his campaign, President Luiz Inacio Lula da Silva hammered the company for showering private investors with cash while neglecting to spend on refining and the energy transition.