Petrobras (PETR4) closes 3% higher as Prates rules out direct fuel intervention

Petrobras shares (PETR3;PETR4) exited a session lower on gains early Wednesday (4) after indications of candidate for chief executive officer of the state-owned company by the new government, as well as a general improvement of the market.

At around 1:15 pm (Brasilia time), PETR3 shares were up 4.26% (R$26.90) and PETR4 jumped 5.64%, to R$23.60; closing gains were more modest, respectively 1.67% (26.23 BRL) and 3.18% (23.05 BRL), but still significant. However, in the cumulative first three trading sessions of the year, they still recorded a devaluation of around 6%. The session, it should be noted, was one of sharp declines for oil, with Brent falling more than 5% and trading below $80 a barrel.

In an interview with reporters, Senator Jean Paul Prates (PT-RN), appointed by the government to the state company, said there will be no direct intervention on fuel prices. The idea would be to stop following the import parity price (IPP) to calculate the selling prices of its refined products. “Today you simulate a diesel made in Rotterdam, plus freight, plus other expenses and you apply that to the price. This does not reward those who produce here ”, he highlighted.

Furthermore, he stressed that increasing Petrobras’ refining capacity is different from building new refineries.

Prates said it is possible to increase refinery capacity by using the same existing refinery facilities with new parts for some fuel types.

The candidate for the position of CEO has declared that everything will be done without tabulation and without direct intervention on the market.

The statements are in line with what the senator said on the matter, but served as an argument for the improvement of roles after consecutive falls and the sensitivity of financial agents to the issue.

The senator also reiterated that saying he is about to close the PPI “does absolutely not mean that he is dissociating himself from international fluctuations”.

“Only that you will use more the fact that you produce internally in favor of the Brazilian economy.”

He understands that since Brazil produces most of its fuel locally, it makes no sense to be guided by import parity.

“How to do it, we will discuss with all stakeholders involved in this process, including the Ministry of Finance,” he reiterated.

Prates also commented on Wednesday that how the expansion of refining capacity in the country might take place is yet to be assessed. He mused that this movement could be through expanding existing units and not necessarily building new units.

“I can increase the refinery capacity using the same equipment as the refineries, with new parts to produce certain types of fuel. You have to think about all this, it could take six months, a year… ”, she said.

“Prates’ recent statement, in addition to being very positive for the market, signaled that the company will continue to be seen with a corporate eye, protected from political interests and attentive to integrity policies and the demands of the international market”, he said. affirmed Cristiano Vilela, specialist in public law and partner of the law firm Vilela, Miranda and Aguiar Fernandes Advogados.

Denis Camargo Passerotti, partner of the Passerotti Sociedade de Advogados office, underlined that, signaling that the fuel price policy will not take place through direct intervention on the market, Prates is trying to calm the anxiety of the market and investors. “It will be difficult to keep values ​​without detaching from the international market, by which it is directly influenced,” he says.

Investors still saw a broad-based improvement in assets after Civil Household Minister Rui Costa told reporters on Wednesday that the government was not currently considering a review of previous reforms, including that of social security.

Radar changes

It should be noted that this Wednesday the Board of Directors approved the early termination of the mandate of Caio Mário Paes de Andrade as president of Petrobras, effective today, and appointed the executive director of production development, João Henrique, as interim president of the company Rittershaussen, until the election and installation of a new president (with government candidate Jean Paul Prates).

Levante Ideias de Investimento recalls that, once the manager’s resignation has been confirmed, the current directors of the company will have to accept the name of Prates to replace him, in an extraordinary meeting (AGE), after the manifestation of the
Petrobras People Committee (Cope), which should last about 30 days. In the event that the current board does not accept the appointment, a new AGE must be convened to dismiss the board and elect new names, this time nominated by the new government.

“The change in command of the state-owned company with the exit of Caio and the entry of Jean Paul was already foreseen by the market, with the current main theme being the timing for the change to take effect. Even if the senator’s name doesn’t meet all the requirements of the state company’s governing internal committees, we believe the politician should take charge of the company without major problems this quarter,” he says.

Levante underlines that, from now on, the market should pay attention to the speeches and proposals of Jean, who has already proved himself against the currently practiced pricing policy (PPI), the recently approved strategic plan, the
of divestments and dividend policy. “A radical change in the strategic plan should take longer to implement, but the distribution of fat dividends should end as soon as Jean takes over,” he assesses, who has put the state-owned company’s assets under pressure. Thus, any indication of less intervention also ends up having a positive impact, even if the stock comes off a steep decline.

(with Reuters)

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