Petrobras Needs Investment, Less Volatile Pricing, Luna Says

Petroleo Brasileiro SA’s incoming chief executive officer wants to continue opening the refining industry to outside investment and will avoid losses on fuel prices.

Joaquim Silva e Luna, a former defense minister who President Jair Bolsonaro abruptly named to lead the state-controlled oil company last week, said in an interview that he’ll work with the board to understand how it prices fuel, while adding that there should be less volatility and more “predictability” and “transparency” for consumers.

Petrobras will continue to focus on its most profitable oil fields in the so-called pre-salt region in deep waters, Silva e Luna said Wednesday in e-mailed response to questions. Brazil’s pre-salt has some of the most productive oil wells anywhere and Petrobras has been directing an increasingly large share of its business plan to develop them.

“We can’t forget the basics. Petrobras is the company with the most know how and has leadership in deep water-exploration, where the pre-salt reserves are located,” he said. “We can’t pull back from exploring.”

Petrobras shares extended gains after his comments and were up 2.5% to 24.66 reais as of 2:08 p.m. in Sao Paulo. The stock tanked 22% Monday as investors worried Silva e Luna’s appointment signaled government interference at the company.

CEO Roberto Castello Branco, who has publicly clashed with the president over the scale of recent price increases, will keep his job until his term ends on March 20, Petrobras said in a statement Tuesday. Silva e Luna said he respects Castello Branco and hopes to meet with him and current management for an orderly transition.

“I believe that there are opportunities to attract companies interested in refining our oil,” Luna said.

Rising oil prices have been a mixed blessing for Petrobras historically because it has come under pressure from both business- and labor-friendly administrations to suppress fuel costs. Truckers, who brought the economy to a halt during a strike in 2018 and are part of Bolsonaro’s political base, have been complaining about rising diesel prices and threatening to strike, prompting the president to publicly criticize what he called excessive increases.

“There are things we practically have no power to change, like the exchange rate and the international price of oil, that will strongly impact fuel prices and affect the pockets of consumers,” he said. “We will look for other ways, like I say, always in in consensus with the other directors and the board, taking measures together, to see what is possible to do, without suffering losses.”

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