Petrobras’s New CEO Pledges Debt Cutting, Independent Management

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  • The government will no longer determine fuel price levels: CEO
  • Petrobras can’t explore pre-salt alone, says new CEO

Pedro Parente is on a mission to restore financial health and public trust to Petrobras. To do that, the new chief executive officer of Brazil’s beleaguered state-run oil giant wants independence from the government to set fuel prices and more leeway for international partners to come in.

A veteran business leader, Parente said his immediate task as the new chief executive officer of the world’s most indebted crude producer is slashing leverage without turning to the government for a bailout. Then the company will be able to focus on accelerating deep-water projects through greater cooperation with its partners, he said.

Pedro Parente

Photographer: Evaristo Sa/AFP via Getty Images

“The search for a proper balance between debt and cash flow will continue to be an obsession for the company’s management," Parente said in Rio de Janeiro, where the company is based.

Petrobras needs more flexibility to chose which fields in the so-called pre-salt region it wants to invest in, said Parente, who urged Congress to alter legislation that forces the company to operate all oil fields in the region with a minimum 30 percent stake. The deep-water area can’t be completely explored unless it is opened up to outside operators, he said.

“Petrobras has a history in successful partnerships,” Parente said. “They will be very valuable to reach our goals.”

Scaling back Brazil’s nationalist oil legislation passed during a commodities boom is expected to make offshore assets more attractive to international companies that prefer to control day-to-day operations. Parente said he will continue to pursue asset sales to reduce debt.

$2.1 Billion

Petroleo Brasileiro SA, as it is formally known, has already sold about $2.1 billion in assets since last year as part of a plan to reduce debt and concentrate its waning resources on megaprojects in deep waters off the coast of southern Brazil. The majority of the money so far has come from unloading its operations in Argentina and Chile.

Parente is entering the job as oil prices have recovered from 12-year lows and acting President Michel Temer looks to restore investor confidence with a group of cabinet officials that Goldman Sachs Group Inc. dubbed a “dream team.”

Parente was a member of Petrobras’s board for almost four years starting in 1999, and its chairman for nine months, while he was part of former president Fernando Henrique Cardoso’s cabinet. He was also the head of agribusiness giant Bunge Ltd.’s Brazil unit from 2010 to 2014. He was chairman of BM&FBovespa SA, the operator of Latin America’s biggest securities exchange, until he joined Petrobras this week.

Independent Management

Brazil’s government, which controls Petrobras’s board with a majority of voting shares, will no longer be directly involved in setting fuel prices, Parente said. While the new company CEO said he demanded authority to set fuel prices as a condition for the job, Energy Minister Fernando Coelho told reporters at the same event that it would be a topic of discussion among cabinet ministers, without elaborating.

Petrobras’s refining division reported tens of billions of dollars in losses during the commodities boom because it sold imported gasoline and diesel at a loss as part of a wider government push to curb inflation.

Petrobras will continue to clean up the company that was “victimized” by a group of corrupt executives who were looking for personal enrichment and power, Parente said. A group of suppliers was bribing top company executives and politicians for years to win contracts at the company under a scheme uncovered by the so-called Carwash probe. Parente vowed to restore pride in a company that pioneered oil exploration in ultra-deep waters.