New Petrobras president must maintain pricing policy, say analysts

The market’s first reactions to the appointment of José Mauro Coelho to the presidency of Petrobras were confidence in the continuity of the company’s commercial strategy and policies, including the one that defines the price of fuels.

Analysts and investors see little room for changes in management, both because of the short time until the elections and because of the shield against political interference established in the State-owned Companies Law and in the company’s own statute.

Coelho is considered a name with technical knowledge of the sector and good traffic with the government, but with little experience in corporate management. In the last 14 years, he has worked in federal agencies linked to the energy sector.

The choice did not enthuse representatives of minority investors with a relevant stake in the company, but it was not criticized either. The assessment is that it was a possible solution to the difficulties in finding a name one week before the shareholders’ meeting.

Coelho’s name was announced just one day after consultant Adriano Pires, the first government nominee to replace General Joaquim Silva e Luna in the presidency of the state-owned company, resigned.

Pires was questioned for a possible conflict of interest with his activity as a consultant, in which he defended the interests of gas and thermal generation companies.

Coelho, who currently occupies a seat on the board of directors of PPSA (Pré-Sal Petróleo SA), the state-owned company responsible for managing the Union’s interests in pre-salt fields, has already defended the practice of international fuel prices when he was the MME (Ministry of Mines and Energy).

“Given its technical background and its role at PPSA, we do not expect any interference in the current strategy or focus”, wrote analysts Luiz Carvalho, Matheus Enfeldt and Tasso Vasconcellos, from UBS BB.

“We believe that, in the short term, Petrobras’ regulations and Brazilian law reduce the possibility of intervening in the company’s policies”, add Bruno Amorim, João Frizo and Guilherme Costa Martins, from Goldman Sachs.

The market also cites the choice of Márcio Weber to preside over the board as another sign that there will be no change in the company. He is already a member of the collegiate and was chosen to replace the nomination of the president of Flamengo, Rodolfo Landim, who also withdrew from disputing the vacancy.

For analysts at UBS BB, Weber “will contribute to the continuity of Petrobras’ strategy and provide some stability in a period of change, particularly on the eve of the elections.” His recommendation also pleased

Analyst Ilan Abertman, from Ativa Investimentos, points out that the definition of the names should reduce uncertainties that generated great volatility in the value of the state company’s shares, which had been trading in a different way from its international competitors.

The names of Coelho and Weber will be appreciated by shareholders next Wednesday (13). At the assembly, the government is trying to sign eight other names, four of them vying for reappointment: Weber, Ruy Flacks Schneider, Murilo Marroquim and Sonia Villalobos.

Coelho, Luiz Henrique Carolli, Carlos Lessa Brandão and Eduardo Karrer will be debutants on the state board, if approved by the shareholders, who are trying to sign seven other names for the ten vacancies in dispute — the 11th belongs to the employee representative.