Petrobras CEO prospect pitches an expansive vision for oil giant

(Reuters) – Brazil’s state oil producer Petroleo Brasileiro SA needs to invest more in natural gas and set a path to return to its former role as an integrated energy provider, one of the top prospects to be Petrobras CEO told Reuters in an interview.

Magda Chambriard, a former Brazil oil regulator, also said she does not support taking back divested oil refineries and other assets or using Petrobras’ profits to subsidize consumer fuel prices.

Her vision, laid out in an interview on Wednesday, largely echoes that of President-elect Luiz Inacio Lula da Silva, who will choose the next chief of Petrobras (PETR4.SA).

She faces tough competition for the top post from Senator Jean Paul Prates, another Lula transition team member whose prospects received a boost this week from Congress, voting on legislation that may allow for politicians to run state enterprises.

Lula, who spent time in jail over a Petrobras corruption scandal, campaigned on abandoning further privatization of Petrobras, and on investing in diversification.

Petrobras has sold oil refineries, retail gas stations, power plants and gas pipelines to pay debt and boost its shareholder payouts. The company now invests a third of what it did a decade ago and is making record profits.


Chambriard said she is not in favor of taking back those asset sales.

“Reversing contracts would sent a terrible signal to the market,” she said during the wide-ranging interview, adding changes to Petrobras’ near-term strategy should be done with caution.

“Abrupt actions could lead to unwelcome results,” she said.

Chambriard also commented on the traumatic past use of Petrobras coffers to subsidize fuel sales in the nation of 215 million people. Subsidies drained $40 billion from Petrobras under leftist President Dilma Rousseff.

“I don’t think this would happen in this government,” Chambriard said when asked how she would handle a president request to lower fuel prices to consumers. “The Brazilian state has evolved.”

She opposes weekly fuel adjustments to avoid volatility.

Like Lula, she believes the way to guarantee Petrobras’ future in a world determined to cut planet-warming emissions should include developing less carbon-intensive fuels, such as natural gas.

“It is an energy transition fuel that deserves more investments,” Chambriard said, outlining a proposal to build pipelines and bring offshore natural gas now reinjected in oil wells to use onshore.


“Petrobras gave two steps back as everyone else was moving a step forward” in the transition to cleaner fuels from fossil, Chambriard said. “It now needs a long term strategy. It can’t go in the opposite direction of the rest of the world.”

A consultant at think tank Getulio Vargas Foundation (FGV), Chambriard started her 40-year career in the industry as an oil reservoir engineer at Petrobras in 1980.

Some of the dividends Petrobras distributed this year should be redirected to energy production, including exploration of new oil and gas fields, she said.

“A publicly traded company needs to pay dividends, but not to the point to compromise its future survival.”

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