Brazil’s Bolsonaro to oust Petrobras CEO after fuel pricing spat

Brazil’s Bolsonaro to oust Petrobras CEO after fuel pricing spat
Roberto Castello Branco, the CEO of Brazil’s state-run oil company Petrobras. (File/Reuters)
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Updated 20 February 2021

Brazil’s Bolsonaro to oust Petrobras CEO after fuel pricing spat

Brazil’s Bolsonaro to oust Petrobras CEO after fuel pricing spat
  • The government said it had decided to appoint former Defense Minister Joaquim Silva e Luna to run Petroleo Brasileiro SA

RIO DE JANEIRO: Brazilian President Jair Bolsonaro moved to replace the head of state-run oil company Petrobras, naming a retired army general with no oil and gas experience as CEO after weeks of clashes with the current chief executive over fuel price hikes.
In a late Friday statement from the Mines and Energy Ministry, first shared on Bolsonaro’s Facebook page, the government said it had decided to appoint former Defense Minister Joaquim Silva e Luna to run Petroleo Brasileiro SA , as the firm is known formally.
Current CEO Roberto Castello Branco, backed by investors for his efforts to sell underperforming assets and cut debt, would be the second Petrobras leader in three years to fall over the political fallout from fuel pricing. In 2018, then-CEO Pedro Parente resigned when the government forced fuel prices lower in a concession to striking truckers.
Parente vowed to set domestic prices in line with global markets, breaking with a policy that made Petrobras sell fuel below international parity, triggering some $40 billion in losses from 2011 to 2014.
Similarly, Bolsonaro tangled with Castello Branco over his insistence on raising prices for diesel and other fuel as Brazil’s currency weakened and global crude prices surged. Petrobras ADRs traded in New York slumped 8.9% in after-hours trading on Friday, adding to the day’s drop of nearly 7% in its Brazil-listed preferred shares.
Petrobras has been raising fuel prices since a Feb. 5 Reuters report disclosed details of the company’s price policy, which led analysts to downgrade its shares on concerns of possible political interference.
Castello Branco’s ouster could force a broader shakeup at Petrobras, which has steered toward more market-friendly and less politically driven policies in recent years.
The company’s senior management is considering resigning en masse to protest the CEO’s replacement, three people close to the executives told Reuters on Friday evening.
Petrobras said in a statement that it had received notice from the Mines and Energy Ministry about the proposed CEO change, adding that the ministry had requested an extraordinary shareholders’ meeting.
The company’s board of directors is to meet on Tuesday in a regularly scheduled session.
Most of the board has so far proven loyal to Castello Branco, although the majority are government appointed, which could create a messy transition.
Castello Branco, whose current mandate officially expires on March 20, was appointed to lead Petrobras when Bolsonaro took office at the start of 2019.
A University of Chicago-trained economist and ally of Economy Minister Paulo Guedes, he is a strong advocate of free-market policies and has previously rebuffed the president’s complaints about prices.
But investors have been jittery about possible political interference since the oil producer confirmed it was selling fuel in Brazil below international prices for longer periods than previously disclosed, confirming a Reuters report.
The possible shakeup of senior management also puts in doubt one of the CEO’s main goals: ending Petrobras’ near monopoly in refining in Brazil, three source close to bidders said.
Silva e Luna, who has won frequent praise from Bolsonaro for his management of Brazil’s massive Itaipu hydroelectric dam on the border with Paraguay and Argentina since 2019, is little known to investors.
He would be the third military figure to occupy a key energy post: the president of Petrobras’ board and the nation’s Mines and Energy minister are both admirals.
In April 2019, just months after Bolsonaro took office, the president demanded explanations for Petrobras’ price hike, which was swiftly reversed. After company shares tumbled, Petrobras and the government assured investors that there would be no political interference in fuel pricing.
Tensions eased last year as crude prices tumbled, but truckers have renewed their complaints in recent months.
During a late Thursday announcement about lower fuel taxes, Bolsonaro made clear his dissatisfaction with Castello Branco, saying there would be changes at Petrobras “in coming days.”
Analysts and investors were jarred by the quick succession of events on Thursday and Friday.
“It’s a delicate situation, and it happened in such a disorganized way,” said Edmar de Almeida, a professor specializing in energy at the Federal University of Rio de Janeiro.
Petrobras will complete 67 years in 2021 and will have its 39th CEO — or about one head every 18 months, said UBS analyst Luiz Carvalho.
The company’s issues will persist as long as its controlling shareholder — the government — does not understand that the problem is not with the company’s executives, but with the lack of a coherent strategy from above, he said.
“While the world is moving toward an energy transition with a cleaner energy mix, in Brazil we are discussing subsidies for diesel consumers,” Carvalho said.


King Salman Energy Park signs anchor tenants

King Salman Energy Park signs anchor tenants
Updated 8 min 5 sec ago

King Salman Energy Park signs anchor tenants

King Salman Energy Park signs anchor tenants
  • President and CEO of SPARK Saif Al-Qahtani: SPARK is proud to welcome TAQA and AMCO as they take the first step toward launching their operations
  • By 2035, the park is expected to contribute more than SR22 billion to the Kingdom’s gross domestic product

RIYADH: King Salman Energy Park (SPARK), the Dammam-based project backed by Saudi Aramco, added two new anchor tenants on Thursday, the Abu Dhabi National Energy Company (TAQA) and AMCO.

President and CEO of SPARK Saif Al-Qahtani said: “SPARK is proud to welcome TAQA and AMCO as they take the first step toward launching their operations. SPARK sits at the heart of the energy market, offering a world-class ecosystem that facilitates the growth of our tenants’ businesses and brings sustained value to our wider communities. SPARK is set to be a fully integrated city, bringing together major national and international companies and fuelling economic growth and job creation.”

TAQA will expand its local operations with the TAQA Industrial Park at SPARK, including a new facility for oilfield services, a specialist unit for engineering and manufacturing, and a wireline and perforation center of excellence.

The facilities will be constructed in two phases starting in the second quarter of 2021, with the design and developmental planning stages having already commenced.

TAQA CEO Khalid Nouh said: “With our plans for future acquisitions focused on cutting-edge technology and innovative solutions, we further cement our alignment with Vision 2030 and the government’s drive to diversify and localize services and manufacturing in the Kingdom.”

AMCO is investing over SR260 million ($69.33 million) in a new center at SPARK. Its plans include the development of facilities to enable the manufacturing and production of steel pipes, valves, pumps, turbines, and machine and rotary equipment.

AMCO’s facilities will be developed in three phases, allowing for the gradual build-up of manufacturing capabilities and onboarding of local talent.

By 2035, the park is expected to contribute more than SR22 billion to the Kingdom’s gross domestic product, provide up to 100,000 direct and indirect jobs and localize more than 350 new industrial and service facilities.


GRAPHIC: From Beirut to Damascus currencies take a battering

GRAPHIC: From Beirut to Damascus currencies take a battering
Updated 18 min 47 sec ago

GRAPHIC: From Beirut to Damascus currencies take a battering

GRAPHIC: From Beirut to Damascus currencies take a battering

Lebanon’s president this week ordered the central bank governor to open an investigation into currency speculation, after the Lebanese pound plunged to record lows on the black market.
But the battered Lebanese pound is not alone among regional currencies that have been decimated by the impact of the pandemic and other factors.
The Syrian pound also fell to a record low on the black market this week, dragged down by its close commercial and banking ties with Lebanon.
“Businessmen and traders are fretting over fears of a free-fall in coming days and watching if unrest grows in Lebanon and its impact on dealings since Lebanon is our lifeline to the outside world,” said one Damascus-based trader told Reuters, who requested anonymity.


Oil prices rise after Saudi minister urges caution on market

Oil prices rise after Saudi minister urges caution on market
Updated 31 min 17 sec ago

Oil prices rise after Saudi minister urges caution on market

Oil prices rise after Saudi minister urges caution on market
  • OPEC and allies meet today
  • Oil price rises ahead of meeting

LONDON Oil prices rose more than $1 per barrel on Thursday after Saudi Energy Minister Prince Abdul Aziz bin Salman urged caution and vigilance at the beginning of a meeting of OPEC ministers and their allies about the future of supply cut
Brent crude futures were up $1.11, or 1.7 percent, at $65.18 a barrel while U.S. West Texas Intermediate (WTI) crude rose $1.07, or 1.8 percent to $62.35.
Ministers from OPEC members and their allies started a meeting to discuss the future of an oil output cut at 1300 GMT.
Analysts and traders say a four-month price rally from below $40 a barrel is now out of step with demand and that physical sales are not expected to match supply until later in 2021.
In the United States, despite a record surge of more than 21 million barrels in crude oil stockpiles last week, gasoline stocks fell by the most in 30 years as refining plunged to a record low because of the Texas freeze.


Saudi energy minister: Recovery in oil demand related to speed of COVID-19 vaccine distribution

Saudi energy minister: Recovery in oil demand related to speed of COVID-19 vaccine distribution
Updated 20 sec ago

Saudi energy minister: Recovery in oil demand related to speed of COVID-19 vaccine distribution

Saudi energy minister: Recovery in oil demand related to speed of COVID-19 vaccine distribution

LONDON: The recovery in oil demand is related to the speed of COVID-19 vaccine distribution, Saudi Arabia’s energy minister said on Thursday.

Speaking at the opening of a meeting of the Organization of the Petroleum Exporting Countries, Russia and its allies, a group known as OPEC+, Prince Abdulaziz bin Salman said that the Kingdom has “contingency and backup plans in case unforeseen things happen,” Al-Ekhbariya reported. 

He added that the situation in the oil market had improved but the outlook for a recovery in demand remained uncertain.

Ministers from OPEC members and their allies started a meeting to discuss the future of an oil output cut at 01:00 P.M. GMT.


Abu Dhabi’s Etihad Airways reports $1.7 billion loss in 2020

Abu Dhabi’s Etihad Airways reports $1.7 billion loss in 2020
Updated 04 March 2021

Abu Dhabi’s Etihad Airways reports $1.7 billion loss in 2020

Abu Dhabi’s Etihad Airways reports $1.7 billion loss in 2020
  • Regional carriers hit hard by pandemic
  • CEO says airline stood firm in face of downturn

ABU DHABI: Etihad on Thursday reported core operating losses of $1.7 billion in 2020, reflecting the severe toll of the coronavirus pandemic on the long-troubled airline that has lost billions in recent years.
Etihad reported revenues of $2.7 billion in 2020 compared to $5.6 billion the year before, a precipitous decline it attributed to “drastically fewer people traveling” as the surging pandemic crippled air travel.
But the airline, one of the Middle East’s top carriers, struggled with financial losses long before the pandemic wiped out the global aviation industry. Since 2016, Etihad has lost a total of $5.62 billion as it has aggressively bought up stakes in airlines from Europe to Asia to compete against the region’s other leading airlines, Dubai-based Emirates and Qatar Airways.
With cost-cutting measures, the company was just starting to recover from the economic pain early last year. It announced the sale of 38 aircraft to an investment firm in an attempt to bolster profits, in a deal valued at $1 billion.
Then, the pandemic struck. Last March, the United Arab Emirates halted flights to stem the spread of the virus. Passenger traffic plummeted to just 4.2 million travelers from 17.5 million the year before, the airline said. Total passenger capacity on planes dropped 64 percent. The carrier lost $758 million over the first half of 2020 alone. The losses rippled across the company, forcing the airline to cut 33% of its workforce and slash salaries by 25-50 percent.
By comparison, Etihad lost $870 million in 2019. The airline reported losses of $1.28 billion in 2018 and $1.52 billion for 2017.
While rollout of coronavirus vaccines has stoked hopes for a global return to travel, the industry is not expected to see meaningful recovery for months, until vaccines are widely administered.
Still, Etihad CEO Tony Douglas struck an optimistic tone in the earnings announcement.
“While nobody could have predicted how 2020 would unfold,” he said, “Etihad stood firm and is ready to play a key role as the world returns to flying.”