Analysis: The challenges Jean Paul Prates will face as CEO of Petrobras
As Jean-Paul Prates takes over as CEO of Petrobras on Thursday, he will find a company very different from the last time the Workers’ Party (PT) was in power. President Luiz Inácio Lula da Silva’s nominee for the state-run company has an immediate task to deal with sensitive issues, such as the global rise in fuel prices and its impact on the domestic market.Mr. Prates will also have to deal with major international issues, such as the energy transition and the challenges for oil companies to adapt to a world with lower emissions of polluting gases.Mr. Prates, who resigned as a senator to take over Petrobras, finds a much smaller company, in terms of investment and employees, but also less indebted.In 2016, the last year of the Rousseff administration, Petrobras had 68,829 employees, intended to invest an average of $19 billion a year, and reported a total debt of $123.9 billion in June that year, the last quarter before the impeachment of President Dilma Rousseff.Now, the company has 45,532 employees, an average annual investment plan of $15.6 billion, and a debt of $54.3 billion, according to the latest data released.Here are some of the key issues facing Petrobras’s new CEO:Fuel pricesToday, Petrobras follows the Import Parity Price (IPP) policy to determine the prices of the fuels produced in refineries and sold to the distributors. This pricing mechanism has been criticized by members of the current government for passing on to consumers the volatility of oil prices in the world market.During the Rousseff administration, Petrobras even sold fuel in Brazil below the international price, resulting in billions of reais in losses and harming imports by other companies.Mr. Prates said this month that there would be no interference in market prices. Decisions to adjust fuel prices are made by the company’s CEO, together with the chief commercialization and logistics officer and the chief financial and investor relations officer, and are overseen by the board of directors.Sources who have met with Mr. Prates in recent months say the executive is likely to seek a way to avoid passing on volatility to consumers, but without Petrobras practicing below-market prices. The tendency is for such a solution to be discussed with regulators and other industry players and to be defined by the National Petroleum Agency (ANP).During his term as senator, Mr. Prates was the rapporteur of Bill 1472, of 2021, which provides for the creation of the Price...
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