José Mauro Ferreira Coelho took office this Thursday (14) as the new president of Petrobras. The executive serves a one-year term and takes the place of General Joaquim Silva e Luna, who was fired by President Jair Bolsonaro amid fuel price readjustments.
José Mauro Ferreira Coelho takes office as president of Petrobras
Ferreira Coelho did not directly address the issue of Petrobras’ pricing policy, but signaled that he intends to maintain the “management model” adopted since 2017 with improvements in the “company’s communication” about its actions.
“In 2014, Petrobras’ gross debt was US$ 160 billion, one of the largest in the corporate world. Today, with the company’s new management model, it is less than US$ 60 billion. Debt management makes room for to make investments”, he said.
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Coelho’s mention of debt reduction, however, is linked to the pricing policy. Still under Pedro Parente’s administration, the company adopted the import parity price (PPI) to define the price of gasoline and diesel at refineries. The PPI is driven by fluctuations in the price of a barrel of oil on the international market and by the exchange rate.
With the dollar at high levels and the rising value of commodities since last year, this has been the main injection of high fuel prices in Brazil. The successive readjustments, despite helping the company’s cash flow, were the main motivations for the exchange of Silva e Luna and his predecessor, economist Roberto Castello Branco. (Remember the exchanges below)
“It is a management that will value the improvement of communication, especially the improvement of external communication. We will seek greater interaction with society, we have to understand the importance that this company has for Brazilians and many times we cannot have communication that arrives in a palatable way.” to the Brazilian people”, said Coelho.
As had reported the Ana Flor’s blogthe change in command of Petrobras took place because President Jair Bolsonaro and close aides came to the conclusion that the company was communicating poorly and that this spilled over into the government’s image, especially when it came to high fuel prices.
Despite having chosen General Joaquim Silva e Luna just over a year ago to command the state-owned company, Bolsonaro was convinced by allies that the company’s performance had become a problem for the reelection attempt.
Marcio Weber, Bento Albuquerque, Rodolfo Saboia and José Mauro Ferreira Coelho, during the inauguration ceremony of the new president of Petrobras — Photo: André Ribeiro / Agência Petrobras
In his speech, Coelho stressed that his goals in the management of Petrobras will be guided by “efficiency” and “competitiveness”, maintaining the priority in oil exploration while making divestments in parallel activities, such as refining. He claims that production should be increased by 500,000 barrels a day.
“We will work with adherence to our strategic plan, the 2022-2026 plan. In this sense, we will continue to maximize the value of our portfolio, with a focus on deep and ultra-deep water assets. salt,” he said.
Coelho also stated that the divestments in mature fields will continue, so that companies with “adequate size and experience in this type of assets” can continue production and generate gains in opening the oil and natural gas market. “The Campos Basin remains strategic for Petrobras,” he says.
“We remain committed to the best allocation of capital, maximizing the generation of value for the company. (…) This Petrobras, stronger and more valued, brings greater returns to its shareholders and to Brazilian society”, continued Coelho.
“There are more dividends paid to the Union, more government participation, such as royalties, and more taxes paid to states and municipalities, (…) which lead to greater collection of these federative entities and greater investments for the benefit of the Brazilian citizen, generating more jobs and more income”.
When thanking the Minister of Mines and Energy, Bento Albuquerque, Coelho got emotional and choked his voice. “Thank you for the friendship, for the trust and for bringing my name to the present Bolsonaro to preside over the company”, he said.
Who is the new president of Petrobras
José Mauro Ferreira Coelho in audience at the Senate Environment Committee in October 2019 — Photo: Jefferson Rudy / Agência Senado
Ferreira Coelho was chairman of the board of directors of Pré-Sal Petróleo (PPSA) and held the position of secretary for Petroleum, Natural Gas and Biofuels at the Ministry of Mines and Energy until October last year. Before that, he worked for 12 years at Empresa de Pesquisa Energética (EPE), a government-owned company responsible for planning the electricity sector.
The executive holds a degree in industrial chemistry, a master’s degree in materials engineering from the Instituto Militar de Engenharia (IME) and a doctorate in energy planning from the Energy Planning Program (PPE) of the Federal University of Rio de Janeiro (UFRJ).
The assembly also approved Márcio Andrade Weber as president of the new Board. Weber is a civil engineer graduated from the Federal University of Rio Grande do Sul, specializing in petroleum engineering.
The company’s statute provides that the president must, first, be a member of the Board of Directors, and then be elected to the company’s command.
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It is the second time that Bolsonaro changes the presidency of the company due to dissatisfaction with the fuel price policy. Silva e Luna had replaced economist Roberto Castello Branco, who was also pressured by the federal government on account of diesel and gasoline adjustments.
Since 2016, still under the management of Pedro Parente, Petrobras has adopted the import parity price (PPI) to define the price of gasoline and diesel in refineries. The PPI is driven by fluctuations in the price of a barrel of oil on the international market and by the exchange rate.
The rise in oil prices in the international market and the real still at relevant levels of devaluation against the dollar made fuels important drivers of Brazilian inflation. With an eye on reelection, President Jair Bolsonaro (PL) has repeatedly criticized Petrobras’ operation and profit.
Understand the rise in fuel prices
The government announced in late March that it would replace retired general Joaquim Silva e Luna amid President Jair Bolsonaro’s dissatisfaction with Petrobras’ pricing policy.
Initially, the government had nominated economist Adriano Pires for the presidency of Petrobras and businessman Rodolfo Landim for the command of the council.
However, both withdrew from the invitation after it came to light that their names could be disapproved by the people committee, as they have connections with companies that are directly related to Petrobras, which could constitute a possible conflict of interest.
All names nominated for the company’s top echelon undergo an internal evaluation. The objective is to know if they meet the technical and integrity requirements for the role. The practice was adopted after corruption scandals in the company.
Therefore, the government appointed Marcio Andrade Weber to the presidency of the council and José Mauro Coelho to the command of the state-owned company.
Understand the conflicts of interest in the Petrobras succession
According to Petrobras, its board of directors is composed of a minimum of seven and a maximum of eleven members, elected at the General Shareholders’ Meeting for a term of up to two years, with a maximum of three consecutive re-elections allowed.
The Board of Directors is responsible for, among other functions:
- define Petrobras’ mission, strategic objectives and guidelines;
- approving the strategic plan and the multi-annual plans;
- establish the Company’s global policies, including strategic commercial, financial, risk, investment, environmental, information disclosure, dividend distribution, transactions with related parties, spokespersons, human resources and minority interests;
- oversee the management of the Executive Board;
- evaluate, annually, individual and collective performance results of the state-owned company’s administrators; and
- approving the transfer of ownership of the company’s assets.
The president of the company is responsible for managing the company in accordance with the policies approved by the Board of Directors.