Petrobras CEO to leave as Lula prepares to take office in Brazil

Petrobras’s chief executive will leave the Brazilian state-controlled oil and gas producer after only a short tenure, ahead of a possible shift in corporate strategy under president-elect Luiz Inácio Lula da Silva.

Petróleo Brasileiro, as the Rio de Janeiro-headquartered group is formally known, on Tuesday said Caio Mário Paes de Andrade would join the incoming administration of the newly elected governor of São Paulo state.

The 48-year-old will continue in his current role in the coming weeks, giving “exclusive attention to the change of command that will take place in the company”, Petrobras said in a statement. A departure date is not yet set.

His exit is the latest change at the top of Latin America’s largest hydrocarbon supplier, which is an important pillar of Brazil’s economy and has a stock market valuation of $69bn.

Petrobras has had four chief executives in less than two years, after outgoing president Jair Bolsonaro removed its three previous leaders following complaints over fuel price rises.

Paes de Andrade, who assumed the helm in June, was formerly an official in the Bolsonaro administration’s economy ministry.

The move clears the way for a new candidate to be selected by Lula, a veteran leftwinger who will be returning to the presidency for the third time on January 1 after more than a decade out of office.

As the controlling shareholder in Petrobras, with a 37 per cent equity stake and a majority of voting rights, the Brazilian state can effectively appoint its boss.

Lula has stated his desire for Petrobras to expand its refining capacity and play a greater role in the low-carbon energy transition, with investments in areas such as renewable power and biofuels.

The 77-year-old former metalworker has also criticised its policy of moving domestic prices for petrol and diesel in line with international rates.

Many investors, however, are wary of a return to the interventionist approach pursued under past leftwing governments led by Lula’s Workers’ party, or PT.

Petrobras was at the centre of a massive corruption scandal during PT rule called Lava Jato, or Car Wash, which ensnared dozens of businessmen and politicians.

It also became heavily indebted under Lula’s chosen successor as president, Dilma Rousseff, as it was pressured to subsidise fuel prices.

The group has since reformed its corporate governance, divested non-core assets, such as refineries and petrol stations, and focused on deep-sea oil drilling at its rich offshore reserves.

However, it has come under political fire over bumper profits and dividend payouts.

São Paulo-listed preferred shares in Petrobras are down by more than one-fifth since Lula’s narrow election victory over Bolsonaro at the end of October, underperforming the local stock index.