Nov 21 (Reuters) – Brazil’s President-elect Luiz Inacio Lula da Silva is to begin talks with candidates for the leadership of oil firm Petrobras this week, sources familiar with the talks said, kicking off a difficult few months for the state-controlled company.
Lula, who takes office on January 1, has already announced plans for a radical overhaul of Petroleo Brasileiro SA (PETR4.SA), as the company is officially known.
In the trash, according to Lula and his advisers: the privatization of the company. Prepared since 2019, the plan was ready to be implemented next year if Jair Bolsonaro had been re-elected, according to some of its officials.
Back on the drawing board: investments in renewable energy, refineries, job creation and the kind of regional economic development that made Petrobras an integrated energy giant during Lula’s presidency from 2003 to 2010 .
To carry out this reboot of Petrobras’ strategy, Lula plans to achieve a significant turnover in the company’s first- and second-tier management ranks, people familiar with his thinking said.
Lula’s transition team did not immediately respond to a request for comment.
Given the scale of his ambitions, Lula has little time to waste. But technically, it could be two to four months before it can install a new C suite, due to new regulations.
The corporate rules will require at least 45 days for verification, board approval and a shareholder vote on which board member will be the next chief executive. However, this most aggressive timeline would require current CEO Caio Paes de Andrade to step down on January 1. His term technically ends in April.
Andrade, a former economy ministry official with no previous experience in the oil sector, has so far given no indication of his willingness to do so, according to those close to him.
Petrobras declined to comment on Andrade’s behalf.
Bolsonaro, who appointed him, has avoided publicly giving in to Lula, his political enemy, and few expect him to voluntarily collaborate with the transitional government.
Petrobras management is preparing a 90-slide presentation, ten from each senior executive, including the CEO, for Lula’s transition team as part of the formal transfer, company sources say.
Last week, Lula had no direct conversations with candidates for Petrobras chief, according to people familiar with the matter, although a shortlist had taken shape.
This includes Senator Jean Paul Prates, who has yet to be invited to the post despite traveling with Lula on a private jet to the COP27 climate summit in Egypt.
Prates was an energy policy adviser during the campaign, but his appointment may face compliance hurdles due to his campaign for mayor of Natal in 2020. A presidential decree prohibits the appointment of a CEO who ran an election campaign over the past 36 months.
Other candidates on the list include former Bahia governor Rui Costa, a close ally of Lula, and Magda Chambriard, the former head of oil and gas regulator ANP, who previously worked at Petrobras.
William Nozaki, an economics professor at the University of Sao Paulo’s FESPSP named to Lula’s transition team last week, is being considered to lead a non-essential division of Petrobras.
Regardless of who gets the CEO job, the Workers’ Party has insisted that the leadership must be aligned with Lula’s climate policy plans and state-owned enterprises as engines of economic development.
This will include resuming investment in renewables – the biofuels unit and other non-oil assets have been sold in recent years to pay off debt. Under Bolsonaro, renewable projects have been suspended and the company has limited its investments almost entirely to offshore oil production.
The new approach will bring Petrobras closer to the strategy adopted by European majors BP PLC (BP.L) and Shell PLC (SHEL.L), which are cutting crude bets to invest in cleaner energy.
Lula’s advisers also say Petrobras should direct its profits more towards investments rather than its generous recent dividends. Over the past two quarters, the company has paid out more than double the dividend of any European or US oil producer.
Reporting by Sabrina Valle in Houston Editing by Brad Haynes and Nick Zieminski
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