Lula starts interviews for Petrobras overhaul

Nov 21 (Reuters) – Brazil’s President-elect Luiz Inacio Lula da Silva this week begins interviews with candidates to run oil company Petrobras, people familiar with the talks said, marking what could be a difficult few months for the state-controlled company.

Lula, who takes office on January 1, has already announced plans for a deep restructuring of Petroleo Brasileiro SA (PETR4.SA)as the company is officially called.

Into the dustbin, according to Lula and his advisors: the privatization of the company. The plan, which has been in preparation since 2019, according to some of its makers, was ready to be implemented next year if Jair Bolsonaro had been re-elected.

Back on the drawing board: investing in renewable energy, refining, job creation and regional economic development of the kind that transformed Petrobras into an integrated energy giant during Lula’s 2003-2010 presidency.

To pull off this reboot of Petrobras’ strategy, Lula is planning a massive turnover at the company’s first and second-tier executives, according to people familiar with his mindset.

Lula’s transition team did not immediately respond to a request for comment.

Given the scale of his ambitions, Lula has little time to lose. Technically, however, it could be two to four months before he can install a new C-suite due to new regulations.

Company rules require a minimum of 45 days for review, board approval and a shareholder vote on the board member who will be the next chief executive. However, this most aggressive schedule would require current CEO Caio Paes de Andrade to step down on January 1st. His term technically runs until April.

Andrade, a former Commerce Department official with no previous experience in the oil sector, has said no sign of being ready, according to people close to him.

Petrobras declined to comment on Andrade’s behalf.

Bolsonaro, who appointed him, has avoided publicly yielding to Lula, his political nemesis, and few expect him to volunteer to assist in the change of government.

According to company sources, as part of the formal handover, Petrobras management is preparing a 90-slide presentation, ten from each top executive, including the CEO, for Lula’s transition team.

PICK LIST

According to people familiar with the matter, Lula had not held direct talks with candidates for the top job at Petrobras until last week, although a short list has emerged.

That includes Senator Jean Paul Prates, who has not yet been invited to the job despite traveling in a private jet with Lula to the COP27 climate summit in Egypt.

Prates was energy policy adviser during the campaign, but his appointment could face compliance obstacles due to his 2020 mayoral campaign in Natal. A presidential decree bans the nomination of a CEO who has campaigned in the past 36 months.

Other candidates on the list include former Bahia governor Rui Costa, a close Lula ally, and Magda Chambriard, the former head of the oil and gas regulator ANP who once worked at Petrobras.

William Nozaki, an economics professor at FESPSP University of Sao Paulo who was appointed to Lula’s transition team last week, is being considered to lead a non-core division at Petrobras.

Regardless of who gets the CEO job, the Workers Party has insisted management must be aligned with Lula’s plans for climate policy and state-owned companies as engines of economic development.

That includes resuming investment in renewable energy — the biofuel plant and other non-oil assets have been sold in recent years to pay down debt. Under Bolsonaro, renewable projects were suspended and the company limited its investments almost exclusively to offshore oil production.

The new approach will bring Petrobras closer to the strategy of European conglomerate BP PLC (BP.L) and Shell PLC (SLEEVE)who are reducing their bets on crude oil to invest in cleaner energy.

Lula’s advisors also say that Petrobras should direct more of its profits into investments than its generous recent dividends. The company has paid more than twice the dividend of any European or American oil producer over the past two quarters.

Reporting by Sabrina Valle in Houston Editing by Brad Haynes and Nick Zieminski

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