June 1, 2018 / 5:24 PM / 6 months ago

Petrobras CEO resigns after Brazil fuel intervention

SAO PAULO (Reuters) - Petroleo Brasileiro SA chief executive Pedro Parente quit on Friday in a surprise move that wiped $12 billion off the state-controlled oil producer’s market valuation, after Brazil’s government responded to a national trucking strike by intervening in the company’s fuel pricing policy.

The following are views on the future of the company, the impact of the move on Brazil’s economy and the government of President Michel Temer:

ROBERT LUTTS, PRESIDENT AND CIO OF CABOT WEALTH MANAGEMENT, SALEM, MASS.:

“There’s a complete lack of confidence in management... Investors are running in the other direction as fast as they can, and the amount of leeway people are giving management teams is very short today, so that’s causing these values

The company has some work to do - a lot of work to do - to repair confidence among shareholders. When you get into a situation like this, everything is suspect, and I think they need to go through a huge rebuilding phase... People view it more as a political asset than a resource asset, which is very problematic, because what is the value of that?”

NEWTON ROSA, CHIEF-ECONOMIST AT SULAMÉRICA INVESTIMENTOS, SAO PAULO:

“It’s the last nail in the coffin for the Temer government, because it symbolizes the end of the hopes that were built up in the first year of the government, and Petrobras was a symbol of a new way of managing things, with a focus on the structural reforms that the country needs. The change at Petrobras contributed to a confidence shock, and now we’re going in the other direction.”

EDMAR ALMEIDA, ECONOMICS AND ENERGY RESEARCHER AT THE UNIVERSIDADE FEDERAL DO RIO DE JANEIRO (UFRJ):

“It’s a disaster for the company. Parente was guaranteeing a strategy. So now the lesson for the market is that all of that strategy has fallen apart ... The company was in negotiations regarding a lot of valuable assets, in the final phase of negotiations. Certainly this makes that more difficult. This puts everything up in the air. There’s now more pressure for the company to stop, to not do anything more, until the election.”

JOSÉ FRANCISCO DE LIMA GONÇALVES, CHIEF ECONOMIST AT BANCO FATOR, SAO PAULO:

“Wanting to change the political nature of state companies, just with a change in government, is a daydream. This confirms that that’s not the case. There’s needs to be discussions in the (electoral) campaign”

ROBERTO CASTELLO BRANCO, ECONOMIST AND FORMER PETROBRAS BOARD MEMBER:

“The populist government, weakened politically during an election year, must have asked Parente for things that he, as a professional, without doubt refused. ... We’ve returned to 2014, when the direction was more state in the economy, more intervention in the markets.”

HELDER QUEIROZ, FORMER DIRECTOR AT BRAZIL OIL REGULATOR, ANP:

“Now, the process of financial restructuring is over. Market credibility has also been hit.”

Reporting by Gram Slattery, Alexandra Alper and Marta Nogueira

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