Petrobras Strikes Drive Pedro Parente, CEO, to Resign, and Cause Shares to Plummet


Pedro Parente, CEO of Petrobras, the state-controlled Brazilian oil producer, resigned on June 1st. His announcement came after trucker strikes across the country compelled the government to drop the price of diesel. The strike was due to last three days and was headed by unions who made their demands clear. They wanted Pedro Parente to step down and they wanted the policy allowing the market to set the price of fuel to end.
The company, whose full name is Petroleo Brasileiro, saw its shares plunge over 20% by midday, following news of Parente’s resignation. Shares in Sao Paulo were even suspended in the wake of the announcement. In a response to the news, Petrobras’ board said it will choose and interim CEO immediately and that all of the remaining executives will retain their positions.
Yet, despite the strikes and criticisms, Parente left the company with his head held high. He wrote in his resignation letter that he had “delivered what he promised” when he originally took control of Petrobas two years ago. However, the former CEO acknowledged that in the light of the trucker strikes, which had serious knock on effects on Brazil’s economy, his presence in the firm was no longer seen as a positive thing.
Last June, the oil company produced a plan that would aim to review fuel prices with more frequency than is currently being done. For almost twelve months, the company has let the prices of oil fluctuate in accordance with the international benchmark crude futures.
This has led to the price of fuel in Brazil surging as oil futures reached the highest they’d been in 3 ½ years. They soared to over $80 a barrel, igniting a flame of discontent across the nation. Parente spoke well of the strikes, praising them for bringing the Petrobras price policy under scrutiny.
Since his appointment as CEO of Petrobras in May 2016, Parente has been spearheading a campaign to turn the fortunes of the Brazilian energy behemoth. The company became the most indebted oil company in the world during the course of a corruption scandal, which touched every corner of the country. It also resulted in the former President Luiz Inacio Lula da Silva being imprisoned.
Lula was convicted of receiving bribes to give out lucrative contracts from Petrobras and received a prison sentence of nine and a half years. In 2018 the court denied his habeas corpus plea and demanded he begin serving his sentence.
Since Parente took control, the oil company has slowly managed to make a dent in the huge debt load it was under. In the first quarter of 2018, this debt amounted to 270.1 billion reais (over $76 billion). During that same quarter, Reuters reported that the company posted its biggest quarterly profit in the last half a decade.

Whilst at the helm, Parente turned the company’s attention to exploiting crude oil production off Brazil’s coast. The crude is located under thousands of feet of salt. If the company retained a level of high productivity and low cost, which is possible in the pre-salt production, it would stay competitive. 

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