Fate of Petrobras hangs in the balance as Lula, Bolsonaro go head-to-head

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The tight electoral race for Brazil’s Presidency will end finally on October 30 when top candidates Jair Bolsonaro and leftist Luiz Inácio Lula da Silva go to a run-off after delivering unexpected poll numbers on October 2.

After the votes were counted, Lula emerged with 48.3% while Bolsonaro polled 43.3%. The other nine candidates did not make enough of an impact to matter in the race.

But the results were not what was expected from the right-wing President and the leftist.

Many opinion polls had pegged Lula up for a sweeping win in the elections but this was nothing but. Bolsonaro held his own and outperformed expectations, with numbers showing that he finished strong in Brazil’s southeast region which includes Sao Paulo, Rio de Janeiro and Minas Gerais states.

Bolsonaro spoke widely of privatising the state-owned Petrobras, passing pro-gun legislation and cutting corporate taxes. The oil and gas world is especially interested in his plans with Petrobras, since his reign has been nothing short of messy.

He fired three Chief Executive Officers (CEO) since early 2021, the latest being José Mauro Ferreira Coelho who served for less than two months.

But it could be a complete turnaround with Lula leading.

Rystad Energy’s Schreiner Parker had said that Lula hinted at bolstering Petrobras’ refining capacity, including through the reversal of refinery privatisations, and stopping the sale of refinery assets that have not yet been struck off the books.

Petrobras has 14 refineries under its bracket; almost half have been put up for sale.

And it is still in the middle of a large divestment program concerning mid to late-life assets that are, at least today, considered ‘non-core’ to its overall development plan which is focused on bringing Santos basin pre-salt barrels to market.

With Lula at helm, Brazil’s energy sector could face a new shake-up to change its course.

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