Petrobras Gets Brazil Stock Exchange Chairman for CEO Jobby and
Parente led agribusiness Bunge’s Brazil unit, RBS media group
‘Petrobras faces huge challenges,’ he told reporters
Petroleo Brasileiro SA will be led by veteran business executive Pedro Parente, as the state-controlled oil producer struggles to reduce debt and navigate the fallout from the country’s biggest corruption scandal.
Parente, who is currently the chairman of BM&FBovespa SA, the operator of Latin America’s biggest securities exchange, accepted an offer from Acting President Michel Temer to become Petrobras’s third chief executive officer in less than two years. The company’s board will meet May 23 to discuss Parente’s appointment, it said in a statement Friday.
"This wasn’t something that I was expecting, but when you’re asked to help rebuild the country, it’s a hard request to ignore and turn down," Parente told reporters not long after his appointment on Thursday. "Petrobras faces huge challenges, and has big plans under way."
While Parente has never run an oil company, his experience in business and government has won praise from investors and fits with Temer’s plan to form an economic team that can restore growth to Latin America’s largest economy. Parente said he’ll keep his job at BM&FBovespa SA if it’s not deemed a conflict of interest.
Parente was previously the president of agribusiness giant Bunge Ltd.’s Brazil unit and chief operating officer of multimedia company Grupo RBS. He was also an energy minister under former president Fernando Henrique Cardoso, where he gained experience managing a national crisis when he oversaw energy rationing during a 2002 drought.
“It’s a good appointment, and could generate sentiment that things are moving in the right direction,” said Lucas Brendler, an analyst at Geracao Futuro Corretora in Porto Alegre, Brazil. “He’s an experienced executive. There seems to be a light at the end of the tunnel.”
The company is in the midst of an asset disposal program that has resulted in sales of about $2.1 billion since last year. Temer is expected to accelerate privatizations, including the possible sale of Petrobras’s fuel distribution business, to help close the budget deficit and win the confidence of investors, a government official with direct knowledge of the matter said this week. Parente told reporters that he’s too new on the job to comment on the matter.
He said there will be no political appointments at the company, and that the government, as the controlling shareholder, will have a voice through official channels such as the board of directors. "Corporate governance mechanisms will work as they should in any major company," he said.
Parente enters Petrobras at a difficult time. The company may need government support as early as 2017 if it fails to raise a planned $14.1 billion from asset sales this year, Moody’s Investors Service said in a research report Thursday. Petrobras may also have difficulties refinancing an estimated $21 billion of debt coming due by the end of 2017 given its limited access to capital markets, Moody’s said.
Rio de Janeiro-based Petrobras is also defending itself against a class action lawsuit in the U.S., a source of concern for investors who have already seen the company report billions of dollars in graft-related losses and impairments from unprofitable investments, including refinery projects that remain unfinished.
The host of financial and legal challenges facing the company had discouraged some of Brazil’s leading oil executives from seeking the job. Parente said outgoing CEO Aldemir Bendine already began rebuilding confidence among investors, which allowed it to raise $6.75 billion from a bond sale this week.