Shares tum­ble by 22pc as CEO re­signs from Brazil’s oil giant

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE - Sab­rina Valle and Peter Mil­lard

PE­DRO Par­ente re­signed as chief ex­ec­u­tive of­fi­cer of Brazil’s state-con­trolled oil com­pany un­der pres­sure from Pres­i­dent Michael Te­mer in the wake of a na­tion­wide strike against high fuel prices.

The res­ig­na­tion sent shares in Petro­bras down 22pc, the most since 1999, and caused the Brazil­ian cur­rency to drop as much as 1pc against the dol­lar as in­vestors pon­dered the ef­fect on Latin Amer­ica’s largest econ­omy.

Pres­i­dent Te­mer is seek­ing a new Petro­bras CEO who will be more fo­cused on the na­tion’s de­vel­op­ment and less on the mar­ket, said Beto Mansur, deputy gov­ern­ment leader for Brazil’s Lower House, in an in­ter­view.

Par­ente’s res­ig­na­tion high­lights the ero­sion of sup­port for mar­ket-friendly poli­cies af­ter two years of aus­ter­ity un­der Te­mer. It’s also a set­back for any pro-busi­ness can­di­date ahead of Oc­to­ber’s gen­eral elec­tions.

“Any can­di­date linked to Te­mer and his poli­cies will have to change their rhetoric to at least be com­pet­i­tive,” said An­dre Ce­sar, a po­lit­i­cal an­a­lyst at Hold leg­isla­tive con­sult­ing.

“Pe­dro Par­ente was thrown to the dogs — it’s a sign that any pres­sure group can get any­thing they want from this weak gov­ern­ment.”

Par­ente stepped down on Fri­day, the com­pany said in a fil­ing, adding that there will be no fur­ther changes to its ex­ec­u­tive man­age­ment.

Par­ente is the high­est-pro­file vic­tim of an 11day truck driv­ers’ strike that grounded flights, closed sugar mills and caused short­ages of prod­ucts from food to petrol.

His de­par­ture marks the down­fall of an ex­ec­u­tive cred­ited with turn­ing around a com­pany shack­led with debt and mis­man­age­ment.

“It is clear that my per­ma­nence at Petro­bras ceased to be pos­i­tive,” Par­ente said in his res­ig­na­tion letter to Te­mer.

“In my time in pub­lic ser­vice, above ev­ery­thing, I have been com­mit­ted to the pub­lic good. I’m not at­tached to any jobs or ti­tles and I will not be an ob­sta­cle to the dis­cus­sion of al­ter­na­tives.” Par­ente (65) took the helm in May 2016, vow­ing to shift com­pany strat­egy away from gov­ern­ment in­ter­ests and to­ward a busi­ness-ori­ented strat­egy. The trained en­gi­neer was also tasked with clean­ing up the im­age of the com­pany that was at the cen­tre of Brazil’s biggest cor­rup­tion probe in mod­ern his­tory.

“In­de­pen­dence from the gov­ern­ment was one of the main tenets of Par­ente’s pro­gramme. His res­ig­na­tion re­vives con­cerns that the gov­ern­ment will force Petro­bras to ar­ti­fi­cially lower do­mes­tic prices, rais­ing risks for its bal­ance sheet and turn­around,” said Fer­nando Valle, a se­nior oil an­a­lyst at Bloomberg In­tel­li­gence.

Par­ente had gained praise in fi­nan­cial mar­kets for plans to sell as­sets to cut debt, re­duc­ing costs, re­cov­er­ing cash flow and im­ple­ment­ing a new and prof­itable fuel price pol­icy.

Un­der Par­ente’s watch, Petro­bras posted its best quar­terly fi­nan­cial re­sults in five years, and the com­pany’s stock price dou­bled.

It was that fuel pol­icy, which matched lo­cal fuel prices to in­ter­na­tional rates, that came un­der fire dur­ing a mas­sive truck­ers strike that wreaked havoc on Latin Amer­ica’s largest econ­omy. As global oil prices rose, the cost of fuel in Brazil also in­creased, spurring dis­con­tent among con­sumers, led by truck driv­ers who de­pend on fuel to make their liv­ing.

Par­ente has long been at the cen­tre of fi­nance in Brazil. He be­gan his career at state-con­trolled Banco do Brasil in 1971, had pre­vi­ously been a Petro­bras board mem­ber, and also be­came its Chair­man un­der for­mer Pres­i­dent Fer­nando Hen­rique Car­doso. He later held nu­mer­ous pri­vate sec­tor po­si­tions, in­clud­ing head of agribusi­ness giant Bunge Ltd’s Brazil unit.

He was chair­man of Bm&fbovespa SA (B3), the op­er­a­tor of Latin Amer­ica’s biggest se­cu­ri­ties ex­change, and in April, be­came chair­man of food giant BRF. BRF shares ad­vanced as much as 13pc in Sao Paulo on spec­u­la­tion Par­ente may join the com­pany. Bloomberg

Demon­stra­tors in Rio wave flags dur­ing a protest in sol­i­dar­ity with Petro­bras oil work­ers

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