Petrobras' CEO is Ousted after Dispute over Dividends

By: C. Oliveira

On Tuesday, May 14th, the chief executive of Brazil's Petrobras offered to step down, the state-run oil company said, as the government lined up a former regulator for the role. Petrobras announced the exit of Jean Paul Prates on Wednesday and shares went tumbling as investors braced for political interference. New York-listed shares of Petrobras fell more than 6% in after-hours trading as news broke that Prates was leaving. 

The head has been ousted following tensions with the Luiz Inácio Lula da Silva administration. Tensions had been building since Prates disagreed with government-appointed board members this year over whether Petrobras should pay an extraordinary dividend to shareholders. Since he took over as CEO in January 2023, Prates has disputed Energy Minister Alexandre Silveira, who has openly criticized the company for not doing enough to lower prices at the pump or boost Brazil's economy with investments. The dispute between Silveira and Prates hit its peak in March when the company's board – largely appointed by Silveira – defied Prates and withheld an extra dividend expected by investors, which weighed heavily on Petrobras shares. Lula, since returning to presidency, has pushed Petrobras to reduce investor payouts and instead invest more in areas such as renewable energy and refineries, aiming to stimulate economic activity. 
Taking Prates' place is Magda Chambriard, a former head of the Brazilian oil and gas regulator ANP under Lula's previous Workers Party administration. She has already taken up her new position, Petrobras said in a securities filing.
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Lula has tasked Chambriard with making the oil giant an engine of job creation and industrial development, taking the firm closer to what it was during Lula's first two terms during 2002-2010.