Oil industry embraces new Petrobras management

OREANDA-NEWS. May 23, 2016. Brazil's oil industry welcomed the appointment of seasoned businessman Pedro Parente as the new chief executive of state-controlled Petrobras.

Last night, Parente, former chief executive of the Brazilian arm of agribusiness giant Bunge and Brazil's energy minister in 2002, accepted interim president Michel Temer's invitation to head the beleaguered oil company. He will replace state banker Aldemir Bendine, who left his post as president of state-owned Banco do Brasil to head the firm in February 2015. The appointment is expected to be approved by the Petrobras board on 23 May.

Parente said his appointment reflects Temer's pledge to eschew political appointments. Investors have long complained of government interference in the oil company?s management and operations, a tendency that contributed to a massive corruption scandal at the firm.

Parente "has a good record in dealing with crisis and that is what Petrobras needs now," a local oil industry executive tells Argus.

The management shift is considered a first step in Temer's plan to reshape Petrobras into a more independent upstream-focused company, undoing the controversial policies implemented during the 13-year rule of the Workers Party (PT) that ended with president Dilma Rousseff?s temporary suspension from office on 12 May.

Temer is pushing a pro-market agenda in a wide range of industries after taking over from Rousseff, who will undergo an impeachment trial.

Rousseff has been forced to temporarily step down while the senate deliberates on claims she airbrushed government accounts ahead of her 2014 re-election. If she is convicted by the senate, as is expected, she will be permanently removed from office.

She and her allies say her removal amounts to a coup.

Bendine was picked by Rousseff to replace Maria das Gracas Foster in early 2015. Foster and her team of directors resigned from the firm under pressure for the handling of the country's biggest corruption scandal.

Bendine too was brought in to handle the crisis stemming from lower oil prices and the massive corruption investigation known as Lava Jato. But his unexpected appointment was largely seen by the industry as a misstep at a time when Petrobras needed a non-political executive to help pull it from the morass.

In his short tenure, Bendine slashed investment spending, implemented plans to drastically cut staff costs, and expanded the company's divestment program, projected to exceed \\$14bn this year. Parente is expected to go further in cutting costs and non-core projects in an effort to rein in Petrobras' \\$126bn debt load.

Parente's appointment has already drawn the ire of labor unions, which continue to threaten a national strike to prevent what they see as the privatization of Petrobras.

"Pedro Parente's ultraliberal profile makes him unqualified to command a state company that has been the anchor of the development and structuring the country's public policies," federal oil workers union FUP said.

Petrobras had been expected to publish its leaner 2016-20 business plan in the coming weeks. The company was not available to comment on whether the change of command will delay those plans.