Exclusive: Incoming Petrobras CEO says he has no plans to push out executives

FILE PHOTO: Petrobras' incoming CEO, Luna, pictured in 2018 (on left).
FILE PHOTO: Brazil's former defence minister, Joaquim Silva e Luna (left), greets his successor, Fernando Azevedo e Silva, during the handover ceremony in Brasilia, Brazil January 2, 2018. REUTERS/Ricardo Moraes

March 24, 2021

By Rodrigo Viga Gaier

RIO DE JANEIRO (Reuters) – Joaquim Silva e Luna, the incoming CEO of Brazil’s state-run oil company Petrobras, told Reuters that at least part of the executive board could stay on when he takes over in April, a signal that he is not planning a wholesale shake-up of management.

The former defense minister and army general added, however, that at least two executives are planning to follow current Chief Executive Roberto Castello Branco out the door on their own volition.

In February, Brazilian President Jair Bolsonaro announced he was replacing Castello Branco with Luna, amid disagreements over a string of domestic fuel price increases.

Castello Branco’s sacking sent jitters throughout financial markets. In years past, Petroleo Brasileiro SA, as Petrobras is formally known, was forced to subsidize local pump prices, costing the company tens of billions of dollars.

In more general terms, Brasilia had until recent years called most of the shots at the company, with political appointees often occupying technical positions within the firm.

In a phone interview with Reuters on Tuesday night, Luna said he would attempt to keep the firm free of inappropriate political interference.

“Political appointments aren’t part of my management ideas. I’ve already dealt with political requests. I didn’t accept it and it wasn’t easy,” said Luna, who previously managed the Itaipu hydroelectric dam on the border with Paraguay. “I believe people have to be chosen based on proven competence.”

Luna said he had spoken informally with Castello Branco. He added that he understood at least two executives were planning to leave, though the incoming CEO did not specify which ones.

“I think that perhaps more people could leave, not immediately, but they’d do it by themselves,” he said. “I’m not planning to arrive changing everything, and there won’t be any change coming from me.”

Petrobras did not immediately respond to a request for comment on Wednesday.

Luna and government officials have suggested in recent weeks the possibility of creating a government “cushion” to protect Brazilians from fuel price volatility without requiring Petrobras to pick up the tab.

The government has not yet formalized any plans, Luna said, but he added that he hopes such plans are finalized when he arrives at Petrobras in mid-April.

Among the ideas is to use oil royalties collected by the government to fund the cushion.

“The idea is to create a cushion, a price buffer,” he said. “It’s around and it exists. There’s nothing ready. The government is going to work on this and Petrobras will contribute and participate. That doesn’t mean pay the bill.”

(Reporting by Rodrigo Viga Gaier in Rio de Janeiro; Additional reporting by Robeto Samora in Sao Paulo; Writing by Gram Slattery; Editing by Matthew Lewis)