Petrobras CEO to step down amid power struggles

Photo: Tomaz Silva/ABr

Petrobras abruptly announced on Tuesday evening that Jean Paul Prates will no longer be the company’s chief executive.

“Petrobras informs that it received this evening from its CEO, Jean Paul Prates, a request that the Company’s Board of Directors meet to consider the early termination of his mandate as CEO of Petrobras in a negotiated manner,” the statement said.

Mr. Prates’s departure comes a day after the company reported lackluster Q1 results — net profits shrank to BRL 23.7 billion (USD 4.8 billion), down by 38 percent year-over-year. Lower sales volumes, a decline in oil prices, and reductions in diesel margins affected the Q1 results.

However, financial performance was not the reason for his departure. For months, Mr. Prates had been engaged in a power struggle with Mines and Energy Minister Alexandre Silveira over disagreements on Petrobras’s strategic role.

Brazil’s oil and gas giant is a state-controlled and not state-owned company. It has equity split between the federal government (its controlling shareholder) and private investors. This diverse stakeholder profile has created a rift between the government and minority shareholders. One side emphasizes Petrobras’s role in governmental policies and its institutional symbolism, while the other is more focused on the company’s financial performance.

Mr. Prates attempted to navigate between these differing interests. However, a faction led by Mr. Silveira advocated using Petrobras to implement the government’s energy policies.

The most recent clash between the two came earlier this year, as factions of the government debated whether Petrobras should pay extraordinary dividends to its shareholders.

Mr. Silveira argued that the funds should be channeled into investments (supported by President Luiz Inácio Lula da Silva), while Mr. Prates pushed for higher dividends.

Mr. Prates will be succeeded by Magda Chambriard, who served as head of Brazil’s National Oil Agency from 2012 to 2016 during the Dilma Rousseff administration. This appointment suggests closer alignment between the government and Petrobras, a move to which investors reacted negatively. Petrobras American Depositary Receipts were down 8 percent in post-market trading.