& Tobago

Very usefull links


News links




Dow Jones

Oil price



Views and News




New Petrobras CEO rules out privatization, wants non-core asset sales



By Gram Slattery, Rodrigo Viga Gaier, Marta Nogueira / Reuters

Petroleumworld 11 16 2018

A University of Chicago-trained economist named on Monday to head Brazil's Petrobras will not privatize the state-run company, but wants to push ahead with selling non-core assets and to focus on oil exploration and production.

Brazil's incoming far-right government announced Roberto Castello Branco as the next chief executive of Petroleo Brasileiro SA, amid a debate over how far to pursue asset sales at the indebted company, Latin America's largest by market capitalization.

Castello Branco's appointment is the latest in a string of market-friendly selections by President-elect Jair Bolsonaro, many of them influenced by his adviser and future Economy Minister, Paulo Guedes.

The appointments have raised hopes among investors that the former army captain, who takes office on Jan. 1, will deliver significant reforms needed to improve Brazil's creaking public finances, including a pension overhaul.

Castello Branco, who in the past has spoken in favor of privatizing Petrobras, on Monday said he had not been tasked with selling off the company but signaled his intention to cut costs, do away with some of the company's downstream operations and focus on its core business.

“The privatization of the company is not in question. I do not have a mandate to think about it,” he told the Folha de S. Paulo newspaper, adding that he expected Brazil's Supreme Court to approve a path enabling the company to continue selling assets such as majority stakes in two blocks of refineries and in a gas pipeline company.

In an earlier interview, with the O Estado de S. Paulo newspaper, he said BR Distribuidora, Petrobras' fuel distribution unit, was not a natural fit for the company and does not generate returns, sending its shares up almost 6 percent as investors bet the government may sell its 70 percent stake in the unit.

Castello Branco also said he would consider all current asset sales, including that of liquid petroleum gas distribution company Liquigas.

“Petrobras' competence is in oil exploration and production,” he told the newspaper.

Guedes has advocated a full privatization of the company while military generals around Bolsonaro oppose such an idea.

Underlining that tension, Bolsonaro told reporters on Monday that certain units of Petrobras could be privatized, even though the company is deemed strategic for the nation.


Castello Branco, a one-time post-doctoral fellow at the University of Chicago, will join other school alumni in the ranks of the incoming administration, including Guedes and former Finance Minister Joaquim Levy, who has been tapped to lead Brazil's powerful state development bank, BNDES.

Chicago's economics department has long been known for orthodox economics, particularly in Latin America, and much of Brazil's business elite is enthused by the prospect of Chicago-linked appointees in top posts in public administration.

“We basically have the University of Chicago economics department taking over the Brazilian economy,” said James Gulbrandsen, chief investment officer for Latin American investments at NCH Capital, welcoming Castello Branco's appointment.

“He's been public in the past about advocating for less government intervention ... all the way to privatizing parts of Petrobras.”

Castello Branco, a member of Petrobras's board until 2016, has also held executive positions at Brazil's central bank and at iron ore miner Vale SA.

“We expect Petrobras' deleveraging process and divestment program to continue under Castello Branco's tenure,” Vincente Falanga and Oscar Camilo, analysts at Banco Bradesco BBI, wrote in a note to clients.


Petrobras, which is burdened by some $88 billion of gross debt, has played a leading role in developing a bonanza of deep-water oil finds in recent decades.

Castello Branco told Folha that the company would now double-down on that strategy, seeking to maximize potential of the so-called pre-salt deep-water area.

“We need to seize this wealth while there is time. In some decades, oil will lose the relevance it has today,” he said.

Petrobras is a source of national pride for many Brazilians, but its central role in Brazil's “Car Wash” investigation, considered by many to be the world's largest corruption probe, has hurt its public image and bottom line in recent years.

Preferred shares of Petrobras rose 0.8 percent after experiencing swings during the day, while Brazil's benchmark Bovespa index fell 0.7 percent.

Bolsonaro on Monday said that Petrobras' outgoing boss, Ivan Monteiro, could go to state-run Banco do Brasil, the country's largest, although no decision has been made. Petrobras said Monteiro would leave his post on Jan. 1.




Reporting by Gram Slattery in Sao Paulo and Rodrigo Viga Gaier in Rio de Janeiro; Additional reporting by Marta Nogueira in Rio de Janeiro and Paula Arend Laier in Sao Paulo; Editing by Daniel Flynn, Lisa Shumaker and Tom Brown from Reuters.

11 19 2018

Copyright© 1999-2018 Petroleumworld or respective author or news agency. All rights reserved.

We welcome the use of Petroleumworld™ (PW) stories by anyone provided it mentions Petroleumworld.com as the source.

Other stories you have to get authorization by its authors. Internet web links to http://www.petroleumworld.com are appreciated.

Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!

We invite all our readers to share with us
their views and comments about this article.
Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

Twitter: @petroleumworld1






Contact: editor@petroleumworld.com,

Editor & Publisher:Elio Ohep/
Contact Email: editor@petroleumworld.com

CopyRight © 1999-2016, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2017, Petroleumworld ™  / Elio Ohep - All rights reservedThis site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.