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. 

Comments

Post a Comment

Popular posts from this blog

The largest solar farms in the world

Image
Solar energy is gaining in popularity. Most people know solar power as the rooftop panels that are being installed on more and more houses; or projects like Elon Musk’s Solar Roof. However, there are many different applications for solar and many ways energy can be generated using the power of the sun. Electricity is the most common use, but solar energy can also be used to heat water for use in the home, or a swimming pool, etc. Solar arrays can also be used to redirect the beams of the sun to a central point which is then converted to heat energy to drive turbines, much like a coal plant would use a burner – only this time there are no emissions, and just clean energy. A large array of solar panels, be it photovoltaic or thermal, is called a solar farm. Here we take a look at a few of the biggest in the world. Tengger Desert Solar Park Located in China, the world’s largest solar farm uses solar PV panels to generate 1,500MW of electricity. This plant covers 43 square kil...
Read more

Water Markets, Privatization and Deregulation

Image
Energy Expert  To bring demand and supply into balance, water markets are necessary. Under a market system, prices are not regulated, but are determined by the free exchange of water rights. In most countries where water is scarce or costly to access, systems of rights for water have emerged either through custom or through laws and regulations. The rights define the amount of water to which the owner is entitled. With rights well defined, water markets allow owners to make better decisions about the water they use. They can decide for themselves whether to use the water or trade the right. The owner of the right may choose to use the water himself when the market price is low. In fact, if the price is low enough the owner may even decide to enter the market and purchase additional water. When prices are high, however, the owner may find it cost effective to conserve water and sell it. While water right markets are emerging all over the world, they are still in their infa...
Read more

The Global Nuclear Report

Image
Nuclear power has been a source of much contention for some time now and the argument of whether it should be harnessed to its fullest potential has been hotly debated. Whichever side you stand on, there is no denying that having a solid understanding of the ins and outs of nuclear power is essential for getting to grips with the global energy industry. Especially now that it looks like nuclear power seems to be creeping back on to the world’s stage in various different forms. While the West appears to be focusing its attention on revamping existing nuclear facilities, the big Asian powers are in the process of building new ones. Japan and South Korea, in particular, are quickly climbing the nuclear energy ladder by producing new reactors and developing an unrivalled expertise in the area. Elsewhere in the world, Russia is currently exploring the possibilities of long-term uranium supply contracts – especially with Kazakhstan who is currently the world’s number one producer ...
Read more