Petrobras chief ousted by Brazil’s Lula government following disagreement on dividends

The head of Petrobras, Jean Paul Prates, has been ousted from his position following tensions with the leftwing Luiz Inácio Lula da Silva administration in Brazil. The decision to remove Prates, the chief executive of the state-controlled oil major, was made by the government in Brasília, according to sources familiar with the matter.

Friction had been building between Prates and government-appointed board members over whether Petrobras should pay an extraordinary dividend to shareholders. Lula, who returned to the presidency last year, has been pushing Petrobras to focus more on investments in areas like renewable energy and refineries, rather than shareholder payouts.

Critics have accused the government of political interference in the company, fearing a repeat of past mismanagement and scandal at Petrobras under leftwing rule. Prates, a former senator from Lula’s party, had prior experience in the energy sector and was handpicked by the leftist leader for the role in January 2023.

His impending departure marks the fifth exit of a Petrobras chief in three years. The company, the world’s seventh-largest oil producer by output, has seen its American depositary receipts drop by 6 percent in after-hours trading in New York following the news of Prates’ exit.

The energy and mines ministry has nominated Magda Chambriard, a former head of the Brazilian oil and gas regulator, to replace Prates, pending board approval. As Petrobras navigates the demands of external investors and the Brazilian state, the company reported a 38 percent decrease in net profit for the first quarter of 2024.

Prates’ departure highlights the ongoing struggle between private sector interests and government influence in Brazil’s energy sector, as Petrobras seeks to balance the expectations of investors with the priorities of the state.