Lula Pressures New Petrobras CEO to Accelerate Refinery and Gas Investments

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Julianne Geiger

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Brazilian President Luiz Inacio Lula da Silva has appointed 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.

This leadership change follows Lula’s dismissal of former CEO Jean Paul Prates amid dissatisfaction with his handling of the company’s strategic plan.

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Chambriard’s appointment raises concerns among investors about increased government intervention in Petrobras as Lula’s administration seeks to leverage the state-run oil giant to bolster Brazil’s sluggish economy. Key areas of focus include the $17 billion earmarked for refinery investments and $9 billion allocated for natural gas and alternative energy projects within Petrobras’s $102 billion five-year plan.

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Energy Minister Alexandre Silveira, a vocal critic of Prates, conveyed Lula’s directives to Chambriard, emphasizing the need for accelerated investments. Chief of Staff Rui Costa echoed this sentiment, highlighting the president’s desire to expedite Petrobras’s investment activities.

The transition also includes discussions on Petrobras’s fuel pricing policy and its exploration plans in the environmentally sensitive Equatorial Margin near the Amazon River’s mouth. The new CEO’s alignment with Lula’s administration has deepened investor apprehensions, given her previous role as head of Brazil’s oil regulator under former President Dilma Rousseff.

Despite her close ties to the government, Chambriard faces significant challenges in balancing the interests of private shareholders, government directives, and consumer sensitivities to fuel price changes. Refinery expansions in the region are notoriously prone to delays and cost overruns, complicating the push for swift investment execution.

Chambriard’s agenda includes navigating Petrobras’s role in petrochemical producer Braskem, where the company is the second-largest shareholder. The potential acquisition of Novonor’s stake in Braskem remains a contentious issue, with Lula advocating for Petrobras to strengthen its petrochemical operations.

Additionally, Petrobras is negotiating its return to managing the Acelen refinery in Bahia, 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 increased oil production ambitions with environmental goals. The exploration plans in the Equatorial Margin have sparked internal disputes, particularly with Environment Minister Marina Silva, a key figure in Lula’s climate agenda.

Chambriard, an engineer with a long tenure at Petrobras since the 1980s, supports the perspective that increased production in the Equatorial Margin is vital for financing Brazil’s energy transition efforts. As she takes on her new role, Chambriard will navigate these complex challenges, balancing government ambitions with the operational and financial realities of Latin America’s largest oil producer.

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By Julianne Geiger for Oilprice.com

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