Petrobras Board May Be Changed by Possible Temer Government

  • Government appoints seven of Petrobras' 10 board members
  • Petrobras CEO has historically been chosen by President

Petroleo Brasileiro SA could change its new board of directors under a new government, adding to uncertainty about leadership at the state-controlled producer as President Dilma Rousseff fights an uphill impeachment battle.

The government, which controls Petrobras through a majority of voting shares, can call a shareholders meeting to replace its seven representatives at any moment, Francisco da Costa e Silva, a former president of the local securities regulator who presided over a Thursday shareholders meeting in Rio de Janeiro, said at the event. Shareholders re-elected Chairman Luiz Nelson Guedes de Carvalho and named nine other board members on Thursday.

The prospect of removing Rousseff from office has made Petrobras the best-performing major oil stock this year with a 53 percent return, according to data compiled by Bloomberg. If Brazil’s Senate impeaches Rousseff she would be replaced by Vice President Michel Temer, who investors expect to implement economic reforms and roll back nationalist oil legislation.

The heads of state-controlled companies and banks have traditionally been selected by Brazilian presidents or their allies in government. Chief Executive Officer Aldemir Bendine, who previously led a state-controlled bank and had no previous experience in oil, was chosen by Rousseff. Bendine also has a seat on the board, which was renewed on Thursday for two years.

Temer has been busy building his cabinet while the Senate prepares to vote on impeachment. While candidates for the key ministries including finance have circulated in the local media, there has been little speculation about who will replace Bendine. Still, Temer is likely to pursue reforms to open the industry to more competition from other oil companies,  Adriano Pires, president of CBIE, an energy consultant in Rio de Janeiro, said in a phone interview.

“The Petrobras president has historically been named by the president,” Pires said. “It will be difficult for the management team to stay - they represent a different government.”

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