Market sees little chance of Petrobras pricing policy changing

The market sees little chance of a change in Petrobras’ fuel price policy after the exchange of General Joaquim Silva e Luna for economist Adriano Pires, announced this Monday (28) by President Jair Bolsonaro (PL).

Pires is recognized as an advocate of opening up the oil sector in the country and the opinion of people in the area and in the financial market is that he will maintain his favorable positioning to the practice of market prices.

In addition, executives and analysts recall, Petrobras’ statute and the State-Owned Companies Law protect the company against interference by the controlling shareholder in its operations.

The third change in command of the state-owned company in just over three years, however, was seen negatively by the market. For analysts at UBS BB bank, the change “may again raise questions about the company’s governance and independence.”

“This demonstrates how the majority shareholder interferes, or tries to interfere, in the company’s price policy”, says the president of Abicom (Brazilian Association of Fuel Importers), Sérgio Araújo. “It’s a company listed on the stock exchange, that’s not very good.”

Araújo, however, praises the government’s choice, saying that Pires is one of the greatest experts in the Brazilian oil sector and that he has always shown support for the policy of monitoring international fuel prices.

“I don’t see a risk of setbacks. It would be a very bad surprise and I don’t believe, for all his history, for all Adriano’s curriculum, that he will align himself with a management to make a setback”, he says.

Analysts Bruno Amorim, João Frizo and Guilherme Costa Martins, from Goldman Sachs, recall that Pires has already defended the creation of a fuel price stabilization fund, while still maintaining the current policy.

“He stated that the fund would be created with Petrobras dividends and royalties, while he defended that the government does not interfere in the company’s pricing policy,” they wrote in a report released this Tuesday (29).

Daniel Cobucci, from BB Investimentos, reinforces that the frequent exchanges are harmful to the company’s image, but stressed that Petrobras “has mechanisms that protect minority shareholders against any actions that go against their interest, such as imports and sales at a loss in the domestic market “.

“To promote changes in this structure [de governança] and in the pricing policy, the main risk for the company’s investment thesis, legislative changes and in the company’s statute would be necessary, which does not seem to us the base scenario at this moment”, he wrote.

Bruce Barbosa, founding partner of Nord Research, points out that the rise in fuel prices is a global problem, which will not be solved by changing the president of Petrobras – according to him, an “easy, quick and wrong solution” to a complex issue.

“Nothing has changed. Looking for a way out of expensive gasoline, Brazil once again changes the president of the state-owned company in accordance with political will in Brasília,” wrote Barbosa.

Pires’ appointment was confirmed at a meeting on Sunday (27) with the Minister of Mines and Energy, Bento Albuquerque, and will be evaluated by Petrobras shareholders at a meeting scheduled for April 13.

Bolsonaro began his term with Roberto Castello Branco at the helm of the company, but fired him in February 2021, already under the impact of rising fuel prices on his popularity.

Silva e Luna, his replacement, even reduced the frequency of readjustments, but kept domestic fuel prices in line with the international trend. During his administration, the price of gasoline rose 27% and that of diesel, 47%. The gas cylinder rose 27% and the CNG (vehicle gas), 44%.

This Tuesday, in a lecture to the military, Silva e Luna once again defended the fuel price policy and said that “there is no place for adventurers” at Petrobras.