Brazil’s president scrambles to name new Petrobras CEO

Brazil's President Michel Temer walks after a press statement at Planalto Palace, in Brasilia, Brazil June 1, 2018. (REUTERS Photo)

(Reuters) – Brazilian President Michel Temer scrambled to name a new chief executive for state-controlled oil producer Petroleo Brasileiro SA on Friday, after the surprise resignation of CEO Pedro Parente over fuel pricing policies.

Parente’s departure wiped $11 billion off the market value of the company, known as Petrobras, and marked the highest profile casualty so far of a trucker’s strike that virtually paralyzed Brazil for nearly two weeks.

Once a beacon of national pride, Petrobras had become engulfed in a damaging corruption scandal and overloaded with debt before turnaround wizard Parente’s arrival as CEO two years ago.

His replacement Ivan Monteiro, until Friday Petrobras’ chief financial officer and formerly a top executive at state-controlled bank Banco do Brasil, will be under pressure to show he can keep cutting debt and pushing investor-friendly policies.

Petrobras’ board said it had named Monteiro as interim CEO at a rapidly organized meeting on Friday, and Temer recommended him to take on the job on a longer-term basis later in the day. However, with elections looming, Monteiro’s tenure is likely to end in December when the president leaves office.

Shares in Petrobras, Latin America’s biggest oil producer, closed down 15 percent on Friday, wiping some 40 billion reais ($11 billion) from the company’s capitalization.

The real currency weakened as much as 1 percent against the dollar. Petrobras bonds also fell, as Moody’s called Parente’s resignation credit negative for the company.

Temer sought to reassure markets as he announced his recommendation of Monteiro.

“We will maintain the economic policy that took the company out of the red in the last two years and made it once again one of the most respected in Brazil and abroad,” he said.

“There will be no interference at all in the company’s pricing policy.”