Petrobras upstream director appointed interim CEO

Brazil's state-controlled Petrobras has named its upstream head Fernando Borges as interim chief executive to replace Jose Mauro Ferreira Coelho, whose sudden departure followed an 18 June diesel and gasoline price hike that enraged Brasilia.

Coelho only assumed the role in mid-April, and his predecessor Joaquim Silva e Luna was ousted by President Jair Bolsonaro following an 11 March fuel price increase. Coelho, a seasoned technocrat, had already effectively been fired shortly after a 10 May diesel price increase but confirmation of his replacement, finance ministry veteran Caio Mario Paes de Andrade, has been stalled on corporate formalities.

Following Petrobras' announcement of a new round of price hikes in May, political leaders urged Coelho to step down, and said the increases were retaliation for his dismissal. Lower congressional house president Arthur Lira said Coelho was working "systematically against the Brazilian people in the country's worst crisis."

Lira is convening congressional leaders today to discuss a potential tax on Petrobras' profits, which he said will be used to help pay for proposals to remove the sting at the pump. News of the possible taxes and even a potential levy on oil exports have weighed on the company's share price, and investors are worried the latest price increase could motivate the government to take a more active role in Petrobras' decision-making. This could include limitations on the company's market-based fuel pricing policy, which has become an easy target for politicians looking for a culprit for high fuel prices ahead of elections in October.

Coelho said maintaining parity was essential for ensuring Brazil continued to receive imports in a tighter global market. The country relies on imports to satisfy around 30pc of its demand for diesel, which has been harder to source since the Russia-Ukraine conflict upended global commodities markets.

Interim chief executive Borges is one of the engineers responsible for developing some of Brazil's biggest pre-salt discoveries and who led a push to open an exploration campaign in the equatorial margin. It is unclear if he will return to his upstream role when a new chief executive is appointed.

By Nathan Walters