Brazil's former president Luiz Inacio Lula da Silva defended his administration's oil record in a fiery speech today that set the tone for a possible 2022 re-election bid against conservative incumbent Jair Bolsonaro.
In a speech at a labor headquarters outside Sao Paulo, Lula took aim at the Bolsonaro administration's privatization drive, including the planned sale of state-controlled Petrobras refineries.
"We did not discover the pre-salt to export crude," Lula said. "It was to export oil products and have a powerful petrochemicals industry in Brazil. All of this is being destroyed." The country's pre-salt play was discovered in the mid-2000s, during Lula's tenure.
"You never heard me talking about privatization," he said. "Who thinks only privatization is good? A public company like Petrobras, well managed as it was in our government, became the world's fourth-largest energy company."
Lula, as he is known, suddenly re-entered political life this week after supreme court justice Edson Fachin ruled on 8 March that the Curitiba court that convicted him for corruption in 2017 had no jurisdiction over the case. The full court has yet to vote on the matter, and public prosecutors are planning an appeal.
The two-term former president (2003-11) is already seen as the main rival to Bolsonaro, his political foil who ascended to the presidency in 2018 in an electoral backlash against Lula's Workers Party (PT).
The preliminary court ruling has accelerated jockeying ahead of the October 2022 elections, accentuating the political extremes while leaving an opening for more centrist politicians such as Sao Paulo governor Joao Doria.
Lula's potential comeback could pressure Bolsonaro to reel in economic reforms, including aggressive moves to downsize Petrobras and sell state-owned utility Eletrobras. Petrobras is already facing uncertainty over its future course after Bolsonaro nominated former army general Joaquim Silva e Luna as chief executive last month, with a mandate to rein in market-based fuel pricing.
What's in a name?
Petrobras and oil regulator ANP recently changed the name of the country's biggest pre-salt field from Lula back to its original name of Tupi. But the former president still casts a long shadow over the oil patch, and holds significant sway with oil workers staunchly opposed to Petrobras' asset sales.
Most of Lula's speech was spent on defending his tenure, which coincided with a sustained upturn in commodity prices. He complained that a lack of leadership has weakened Brazil in the face of the Covid-19 pandemic.
After Lula's hand-picked successor Dilma Rousseff was impeached in 2016, the oil industry began to revive from the corruption imbroglio. Dilma's brief replacement, former vice president Michel Temer, rolled back interventionist policies, including the fuel price controls that had forced Petrobras to take on massive debt.
The fuel pricing issue has resurfaced with Bolsonaro's controversial 19 February decision to replace Petrobras chief executive Roberto Castello Branco with a political appointee willing to restore some state control at the pump.
Lula said the country should be producing more fuel at home, a swipe at importers who have flocked to Brazil after Petrobras adopted import-parity pricing in 2016.
During the PT's 13 years in power, Petrobras was supposed to add around 900,000 b/d of refining capacity, but none of the plans came to fruition. The company is now selling half of its 2.2mn b/d of domestic refining capacity, part of a divestment campaign designed to cut debt and focus on pre-salt oil development.
