Petrobras faces fresh turmoil as Brazilian government’s pick for chief withdraws

Brazilian oil major Petrobras has been thrown into disarray after the government’s choice of a new chief executive pulled out of the job, a day after the withdrawal of an incoming chair also handpicked by Brasília.

Adriano Pires, an economist, was nominated to run the $96bn-valued company only a week ago.

Jair Bolsonaro, Brazil’s president, had moved to replace the state-controlled group’s incumbent boss, an army reserve general in post less than a year, following clashes over a rise in fuel prices.

But on Monday evening, Pires formally stepped aside in the wake of media scrutiny over potential conflicts of interest stemming from his consultancy activity in the energy industry.

“It became clear to me that I would not be able to reconcile my work as a consultant with the role of Petrobras chief executive,” he wrote in a letter to the minister of mines and energy.

Pires added that it was not possible to disconnect himself from his own business in the short time required.

The development left the Bolsonaro administration needing to find an alternative candidate to steer Latin America’s largest oil producer at a politically sensitive moment ahead of October’s presidential elections.

Petrobras has come under public pressure over the cost of diesel, gasoline and cooking gas, which it recently increased after Russia’s invasion of Ukraine triggered a spike in global crude benchmarks.

Outgoing chief executive Joaquim Silva e Luna has stuck to the company’s practice of tracking international rates for domestic fuel, angering Bolsonaro, whose popularity is hurting from double-digit inflation.

Investors last week reacted calmly to the nomination of Pires, who had previously spoken in favour of maintaining the fuel pricing policy. Bolsonaro and his main rival, former leftist president Luiz Inácio Lula da Silva, who is ahead in the polls, have both criticised the policy.

After speculation mounted on Monday, preference shares in Petrobras ended the day almost 1 per cent down, weighing on São Paulo’s Bovespa stock index, which traded 0.24 per cent lower.

Claudio Porto, founder of consultancy MacroPlan, said he had known Pires for more than 20 years and described him as “a competent professional”.

“But the signs indicate that there was indeed a conflict of interest and Petrobras’ governance filters were very strict, which is one of the pillars that support the company’s value,” he said in comments made before Pires’s decision was officially announced.

“I believe that the best thing for shareholders, company executives and for Adriano himself is to give up on this adventure,” Porto added.

Brasília owns about 37 per cent of Petrobras, but with slightly more than half of voting rights it effectively dictates the appointment of the top position.

Pires’s exit followed Rodolfo Landim’s announcement on Sunday that he would reject the nomination to be chair of the group.

Landim said he wanted to focus on the football club where he is president, Rio de Janeiro outfit Flamengo, after it lost a state championship.

However, local press also suggested potential conflicts of interest. Neither Pires nor Landim could be reached for comment.

The government needs to fill the two gaps on a list of board nominees to be approved at a shareholder meeting this month.

Petrobras said it had not received information from the ministry about replacement nominees.

Additional reporting by Carolina Ingizza


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