Magda Chambriard has officially taken the reins as head of Brazil’s oil giant Petrobras, stepping into a role surrounded by market jitters over potential government meddling
In Rio de Janeiro, Magda Chambriard has officially taken the reins as head of Brazil’s oil giant Petrobras, stepping into a role surrounded by market jitters over potential government meddling.
The inauguration event saw President Luiz Inacio Lula da Silva, who put forward Chambriard’s name for the position, in attendance at a Petrobras research facility in Rio, alongside key figures such as Finance Minister Fernando Haddad and Mines and Energy Minister Alexandre Silveira.
Jean Paul Prates, Chambriard’s forerunner, resigned amid escalating friction with the federal government last month. Prates was seen by the market as prioritising shareholder interests over national ones, leading to speculation about whether Chambriard, who previously led the oil and gas regulator ANP from 2012 to 2016, will follow suit.
Chambriard, during her swearing-in, made it clear that her management would be in lockstep with President Lula’s vision and the federal government’s strategy for the nation, stating: “Our management, as expected, is fully aligned with President Lula’s and the federal government’s vision for the country,” and highlighted the government’s position as the majority shareholder.
The shadow of state interference in Petrobras harks back to the infamous “Car Wash” scandal which erupted ten years ago, uncovering a web of corruption involving billions in kickbacks from construction contracts awarded by Petrobras. The probe revealed that these ill-gotten gains helped fill political party war chests and lined the pockets of politicians during the tenure of Lula’s Workers’ Party.
Lula, who was imprisoned for nearly 600 days before his conviction was overturned, blasted the legacy of the investigation during Wednesday’s event. “With the false argument of fighting corruption, Operation Car Wash was actually aimed at dismantling and privatizing Petrobras,” he declared. “If the objective was to combat corruption, the corrupt should be punished and our people’s assets left intact. But that’s not what was done; what was done was an attempt to destroy the company’s image.”
The Intercept Brasil exposed collusion between prosecutors and the leading judge of Car Wash, Sergio Moro, who later became a minister under ex-President Jair Bolsonaro, casting doubt on the probe’s integrity and supporting claims of political bias by Lula’s supporters.
Having defeated Bolsonaro in the 2022 election, Lula has now begun his third non-consecutive term as president. The once-lauded prosecutions of numerous politicians and executives by Car Wash have been increasingly unravelled since last year, with the Supreme Court halting fines from leniency deals, overturning convictions, and shutting down investigations.
These events have sparked fears that corruption may become more rampant or accepted again. However, Rafael Schiozer, a finance professor at the Getulio Vargas Foundation, believes such concerns regarding Petrobras are unfounded. “The company’s governance has improved a lot. Managers today are aware of the responsibilities they have, and corruption is obviously punished,” he said.
Brazil’s government holds a controlling interest in Petrobras, with some Brazilian politicians viewing the oil firm as a lever for national development. This stance often conflicts with minority shareholders’ desires for the company to prioritise profit maximisation.
At a recent event, Lula expressed his desire for Petrobras to be profitable, highlighting that profits can fuel investment and public spending throughout Brazil. Earlier in the year, Petrobras opted against paying out extraordinary dividends to its shareholders, leading to a sharp drop in its share price. Lula backed this decision, labelling the market a “voracious dinosaur”.
Reports indicated that Prates had disagreed with the move. Following Prates’ subsequent resignation, Petrobras’ stock took an additional 9% hit on the day the news broke, although it later recovered some of the losses.
“Prates clearly had a philosophy of creating value for shareholders as the company’s primary objective,” Schiozer commented, noting that Chambriard seems to place more emphasis on Petrobras’ political role. Schiozer voiced concerns that this could lead to investments in inefficient or unprofitable projects, reminiscent of past administrations, though it remains uncertain whether this will happen.
Ex Petrobras chiefs like Magda Chambriard have come out swinging in support of tapping into the oil reserves off Brazil’s north-eastern waters, known as the Equatorial Margindespite environmental sensitivities near the Amazon River’s gateway. Chambriard and others argue that these untapped resources are crucial for making up for the declining yields from established fields further south.
Meanwhile, President Lula has voiced his agreement, although environmental body Ibama hasn’t greenlit Petrobras to start drilling due to concerns over the region’s biodiversitywhich remains largely a mystery.
This call for increased oil production seems to fly straight in the face of global efforts to combat climate change, which is predominantly driven by our reliance on non-renewable energy sources including fossil fuels. Nevertheless, President Lula is trying to position himself as both an advocate for the environment and a supporter of boosting local oil output.
“Is it contradictory? Yes,” admitted Lula candidly during a radio interview with CBN this week, adding “We’re betting big on the energy transition. Now, until the energy transition resolves our problem, Brazil needs to keep making money with this oil.”
