Lula da Silva’s transition team asks Petrobras CEO to halt divestment plan; stop sale of assets

Representatives of Brazil’s transition government asked on Monday in a virtual meeting with the CEO of state-owned Petrobras and other members of the largest Ibero-American oil company and the current government that the company’s divestment plan be suspended until a new management of the company takes office, Maurício Tolmasquim, who is part of the group that deals with issues of Mining and Energy, told Reuters.

During the meeting of just under an hour, the first with the oil company after Luiz Inácio Lula da Silva (PT, progressive-globalist) was declared President-elect by the electoral court TSE, Petrobras representatives did not formally position whether they would welcome the request, Tolmasquim said.

However, they pointed out that there are processes that, if they were interrupted, could generate penalties or losses to the company, he explained.

“We point out that, as the Petrobras board and management is going to change, we consider it prudent to suspend, at least for a while, the divestment plan that is underway.”

“Precisely to give time for the new board to make a decision that could be to move forward or to interrupt,” Tolmasquim said by phone after leaving the meeting.

“The list of assets (for sale) we already know… the ideal would be to suspend everything until the new board.”

“Of course, if there are situations in which the damage or the cost of the shutdown is worse than continuing (the sale), this will be analyzed. Ultimately, the decision is the board’s.”

He said that a request to suspend the sale of assets that do not cause losses to Petrobras would be formalized by letter, believing that no new divestment process should begin at this time.

Tolmasquim pointed out that the meeting was “very good” and that both the president of Petrobras, Caio Paes de Andrade, and the directors and other participants made themselves available.

WAY OF WORKING AND CHANGE OF COMMAND

In this first meeting, the groups did not deal with issues involving the change of command of the oil company.

According to Tolmasquim, the issue is “sensitive” and “it would not be appropriate to discuss it now, in this way”.

Last week, Reuters published that the new government may take longer than desired by the PT to begin to imprint its strategic visions at Petrobras if the current president’s intention to leave the command only at the end of his mandate in April 2023 is confirmed, according to sources with knowledge of the matter.

The meeting participants also discussed Monday afternoon’s working strategy, the focal point for contacts, and how to treat confidential information, among other issues necessary to begin the transition.

“Petrobras is a market company. We have to be cautious,” said Tolmasquim, noting that creating a data room may be necessary to preserve confidential information.

The company has lost ​​23% of its market value since the 2nd round of elections.

Unlike Bolsonaro, who wanted to privatize Petrobras and other state-owned companies, Lula da Silva is an opponent of privatization, which has been expressed in this plunging share price.

“We dealt with preliminary issues, such as document confidentiality and information exchange.”

“We also defined secrecy criteria, classification, and types of data as well as how they should circulate,” added the rapporteur of the Petroleum, Natural Gas, and Biofuels subgroup of the Mines and Energy GT, Senator Jean-Paul Prates, in a statement.

“We are seeking all the information for our report, taking, of course, every care to avoid undue speculation and leakage of information,” said Prates, seen by some as a possible candidate for the CEO position.

A next meeting may take place next Monday, in the face-to-face model, but has not yet been confirmed.

In a statement, Petrobras said that “the first steps have been established for a professional transition within the good governance rules”.

It also said that it has made itself available to provide all the necessary information for the transition team to complete a first diagnosis that should support the next management.

“The request for information should be formalized in the coming days,” the company said in the note.

Besides the president of Petrobras, the meeting was attended by the director of Institutional Relations and Sustainability, Rafael Chaves; the director of Governance and Compliance, Salvador Dahan; and the general attorney of Petrobras, Taisa Maciel.

On behalf of the transition team, Senator Prates, Professor Tolmasquim, and other transition team members were present, as well as representatives from the Ministry of Mines and Energy and the Civil House.