Petrobras Chief Pledges Investor Returns After CEO Upheaval

The new CEO of Brazil’s Petrobras tried to soothe investor concerns about ramping up investments during her first public appearance at the helm of Latin America’s biggest oil producer.

Bloomberg
First Published29 May 2024
Petrobras Chief Pledges Investor Returns After CEO Upheaval
Petrobras Chief Pledges Investor Returns After CEO Upheaval

(Bloomberg) -- The new CEO of Brazil’s Petrobras tried to soothe investor concerns about ramping up investments during her first public appearance at the helm of Latin America’s biggest oil producer.

Magda Chambriard was formally appointed to the role last week at a time of growing unease from investors about government intervention in Petroleo Brasileiro SA. Her predecessor was fired due to a dispute over the amount of dividends the company paid instead of using the money for investments.

“Petrobras is perfectly capable of guaranteeing returns for its shareholders, whether private or governmental,” Chambriard said Monday in her first public comments as CEO. “I understand we need to make a profit.”

Investors appeared to welcome the tone set by the new company chief. Petrobras’s preferred shares rallied at the market open in Sao Paulo on Tuesday, rising as much as 1.9%.

“In many ways, she hinted at a similar strategy to the one followed in recent years, where economic coherence will prevail,” Banco BTG Pactual SA analyst Pedro Soares wrote in a note to clients. “However, our upbeat stance on the name is based on the company’s ability to continue distributing bulky dividends.”

President Luiz Inacio Lula da Silva has made it clear that he would like state-controlled Petrobras to spend more money on expanding in sectors including refining and creating jobs. The government controls the oil producer’s board through a majority of voting shares.

Under Lula, Petrobras has already shifted from the previous administration’s focus on streamlining operations to cut costs. The company has called off a program to sell a group of refineries and may even buy back some of the facilities that were sold under previous management.

Read More: Petrobras Approves Chambriard as CEO to Ramp Up Investment

Chambriard — a former head of Brazil’s oil regulator — said the company needed to accelerate exploration off Brazil’s coast, including the Pelotas Basin and a region known as the equatorial margin near the border with French Guiana.

She has criticized licensing delays for drilling at an environmentally sensitive site in the equatorial margin, saying they are leaving the nation without a source of growth after its top-oil producing basin, the pre-salt, declines.

“We have to be very careful with replenishing reserves, unless we want to accept the fact that we could become importers again,” she said.

Read More: Petrobras CEO Faces Showdown Over Amazon Oil: Energy Daily

On domestic fuel costs, Chambriard said that Petrobras will continue to work to shield consumers from short-term dips and swings in oil prices. After Lula took office in 2023, Petrobras changed its pricing policy to focus more on production costs rather than international price levels.

“What is most undesirable? Bringing price instability to the Brazilian society each day,” she said. “Petrobras has always ensured stability.” 

--With assistance from Beatriz Amat and Leda Alvim.

(Adds market reaction, analyst comment and additional Chambriard comments from fourth paragraph.)

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.MoreLess
HomeNewsPetrobras Chief Pledges Investor Returns After CEO Upheaval

Most Active Stocks

Indus Towers

335.70
08:50 AM | 19 JUN 2024
-8.2 (-2.38%)

Bharat Electronics

310.10
08:50 AM | 19 JUN 2024
-8.15 (-2.56%)

Tata Steel

180.25
08:50 AM | 19 JUN 2024
-0.9 (-0.5%)

HDFC Bank

1,659.15
08:50 AM | 19 JUN 2024
50.4 (3.13%)
More Active Stocks

Market Snapshot

  • Top Gainers
  • Top Losers
  • 52 Week High

Rashtriya Chemicals & Fertil

188.50
08:38 AM | 19 JUN 2024
15.15 (8.74%)

Triveni Engineering & Indus

418.15
08:38 AM | 19 JUN 2024
33.25 (8.64%)

Eid Parry India

794.75
08:38 AM | 19 JUN 2024
61.55 (8.39%)

Sunteck Realty

601.80
08:37 AM | 19 JUN 2024
39.65 (7.05%)
More from Top Gainers

Recommended For You

    More Recommendations

    Gold Prices

    • 24K
    • 22K
    Bangalore
    73,281.00-238.00
    Chennai
    72,711.00-1,095.00
    Delhi
    73,495.00-24.00
    Kolkata
    73,566.00191.00

    Fuel Price

    • Petrol
    • Diesel
    Bangalore
    102.86/L0.00
    Chennai
    100.75/L0.00
    Kolkata
    103.94/L0.00
    New Delhi
    94.72/L0.00
    OPEN IN APP
    HomeMarketsPremiumInstant LoanGet App