Petrobras CEO Unexpectedly Resigns Amid Crippling Nationwide Strike, Sending Stock, Real Tumbling

One day after Brazil's oil workers went on strike, further slowing Latin America's biggest economy which was already crippled by a trucker strike that has paralyzed the nation for the past 2 weeks, the CEO of the state energy giant, Petrobras, Pedro Parente unexpectedly resigned on Friday stepping down as chief of the state-controlled oil company he helped to revive in the aftermath of the Carwash scandal, as the nationwide strike against high fuel prices has unleashed criticism against his free-market policies.

President Michel Temer and President of Petrobras, Pedro Parente; Source: O Globo

Parente, 65, has become the highest-profile victim of the ongoing truckers strike against fuel prices, now in its 11-th day,  that grounded flights, shuttered sugar mills, caused shortages of products from food to gasoline and is expected to lead to a steep drop in Brazilian GDP. As Bloomberg adds, "his departure marks the downfall of an executive credited with turning around a state-controlled oil company that had been shackled with debt, corruption and mismanagement."

The news sent Petrobras stock crashing, down 15% on the day...

... wiping out all of the years gains...

... with even the Brazilian Real tumbling on the news and approaching that critical, for Bank of America, Emerging Markets-crisis threshold of 4.00:

That said, it could be worse: those Petrobras 100-Year bonds due in 2115, are now at 87, down from par in January, but well above the lows of 60 cents on the dollar hit in early 2016.

Pointing out the obvious, the President of the Lower House Rodrigo Maia told Bloomberg that "It’s not a good sign that he’s leaving" adding that Pedro Parente "has a lot of credibility and was doing a great job" something traders, suddenly panicking about what is really going on in Brazil, were clearly aware of.

Parente became CEO of Petrobras in May, 2016, vowing to shift company strategy away from government interests and toward a business-oriented strategy. The former engineer was also tasked with cleaning up the image of the company that was at the center of the Brazil’s biggest corruption probe in modern history, Operation Carwash.

As Bloomberg recounts, Parente gained praise in financial markets for plans to sell assets to cut debt, reducing costs, recovering cash flow and implementing a new and profitable fuel price policy. Under Parente’s watch, Petrobras posted its best quarterly financial results in five years, and the company’s stock price doubled.

Ironically, it was exactly that fuel policy, which consisted in matching local fuel prices to international rates, that came under fire during a massive truckers strike that wreaked havoc on Latin America’s largest economy. And, as global oil prices rose this year, the cost of fuel in Brazil also increased, spurring discontent among consumers, led by truck drivers who depend on fuel to make their living.

And so, less than two weeks after the strike which was launched as a result of Parente's policies, one of Brazil's most respected capitalists is out, leaving traders with the great unknown of what happens next to one of the world's export powerhouses.

Meanwhile, as BBVA FX strategist Alejandro Cuadrado notes, it is unclear how the strike will end although as he warns, it would be a troubling sign to see institutions yield further to populist pressures, warning that "concessions or moves to cool short-term noise, maintains medium to long-term risks."

Comments

Offthebeach Son of Captain Nemo Fri, 06/01/2018 - 13:44 Permalink

So the dumb peasant Brazilians gave the .gov a monopoly on oil, in return for low prices and fellow Brazilian not stealing everything .  

Sucker.

Now the monopoly wants to price full market, with no competition.  So basically higher prices above a competition price.  But this time is different,  and Petrobumblast won't go back to its old thieving ways.  

Sheeple gonna sheeple.

In reply to by Son of Captain Nemo

Truthoutthere Offthebeach Fri, 06/01/2018 - 17:06 Permalink

Petrol prices in Brazil are on a par with Australia which is approx. $USD1/litre(yeah work it out at about 4 litres to a gallon).I don’t know what the average wage is in Brazil(min. wage is $20/day) but it is a fraction of Australia’s.The Brazilians are getting fucked over with petrol prices in any case,without this recent price rise.

In reply to by Offthebeach

Son of Captain Nemo Ghost of PartysOver Fri, 06/01/2018 - 11:35 Permalink

At this point?... Like Venezuela???...

Looking for a stray dog with their .32 caliber?... And if they aren't lucky enough to have that for either "hunting there next meal" or "protection from the Praetorian guard" that protects the likes of Temer and Parente from starving oily breasted females?...  a Palestinian consultant for-hire with a rock and a strap of leather to teach them the fine skills for bringing an "animal" down with one?!!!

In reply to by Ghost of PartysOver

AurorusBorealus Agent P Fri, 06/01/2018 - 11:28 Permalink

Zerohedge, once the proud critic of Wall Street and the site for contrarians, has become just another Wall-Street mouthpiece.  The party-line from Wall Street for years has been that Brazil is one of the greatest countries on earth, because they have allowed massive hot-flows of foreign capital into the nation and allowed Wall-Street and London investment banks to purchase the country.  The result has been the creation of enormous poverty as asset, real-estate, commodity, and consumer prices have climbed well beyond the means of the ever-more impoverished masses.

Look back at my comments on Zerohedge. One month before this strike began in Brazil, I warned people that Brazil was on the verge of chaos and revolution, while Zerohedge and the other Wall-Street media were posting pretty pictures of Brazilian women and running their usual market manipulation plays ahead of an Argentine bond auction (which was quickly bought up and oversubscribed).

The 26-year old Wharton Schoolboys making little color charts with pretty flower pictures on Wall Street, who have done nothing in the lives except flirt with Jewish girls at UPenn, have no idea what is really happening in the world.  The only contact that these boys have with Latin America is the kilos of CIA-delivered Columbian cocaine they snort up their noses every day and the Latin prostitutes from Spanish Harlem that they pick up in their Towncars.  They have no interest in acquiring any actual knowledge of anything.  The only thing that does interest them is conning their clients, so that the investment banks themselves can purchase all the better assets at a discount.

I wish Zerohedge would return to being the contrarian site that it once was as opposed to yet another blind, Wall-Street, puppet site.  Is it not time for another Paul Singer article?

In reply to by Agent P

Escrava Isaura AurorusBorealus Fri, 06/01/2018 - 16:57 Permalink

Wall Street for years has been that Brazil is one of the greatest countries on earth, because they have allowed massive hot-flows of foreign capital into the nation and allowed Wall-Street and London investment banks to purchase the country. The result has been the creation of enormous poverty as asset, real-estate, commodity, and consumer prices have climbed well beyond the means of the ever-more impoverished masses………..The only thing that does interest them is conning so they can purchase all the better assets at a discount.

Not that I need to remind you in Argentina that is not only Brazil or South America that is under this capitalist system, but the whole world. US corporations own about 40% or Europe. If Europe breaks apart the US will own 98% of Europe.

And they didn’t use real fiat ‘printed’ money otherwise it would have given too much power to the population, so they used fiat-debt money with usury, interest rates.

Can you blame Americans elite?

That’s how they built the American middleclass while telling the American population that it was the free-market.

I guess when one believe in angels and rapture because Mathew and Mark sad so in the bible, even that no one know who these are, why not believe in free-market, after all, if they say so, it must be so, right?.

 

Anyway, the crux of the problem, capitalistic speaking, is that everyone is dependent on money for survival and happiness; however, as there is less and less money in the world inequality and injustice will grow, so will the anger and the need for revenge by the ones left behind.

 

What I don’t seem to find the answer is when state capitalism fails will the social order move left, socialism or move right, fascism.

 

Time will tell what these nations will do.

 

In reply to by AurorusBorealus

falak pema smacker Fri, 06/01/2018 - 12:57 Permalink

The great thing about the social structure of Brazil is visible to anybody who has lived there a bit :

In the West ONE DROP of colored blood makes you a "halfbreed"; aka non-white.

In Brazil one drop of white blood makes you a white, upperclass "Wasp" or its local social equivalent.

That says it all ! 

Apart from that Brazil has always suffered from the perennial doctrine of Monroe and Manaus was the place where THEY taught the generals how to throw the rebels out of helicopters; in fact the french invented that during the Battle of Algiers and it went viral amongst the extreme right military buddies of Allen Dulles and then of Kissinger !

Now they throw them out of the Amazon gone a huge colony of GM Soja lobby like in Argentina. Mercosur is a corporate whore like Chile and Columbia; whereas Venezuela is its statist Doppelgänger.

You can't beat that for a lose-lose situation.

In reply to by smacker

smacker falak pema Fri, 06/01/2018 - 13:41 Permalink

Fascinating as always Falak :-)

I sometimes think the only real solution for Latin America is to wipe it out and start again. There are just too many people who are poorly or uneducated who have no future ambitions and add nothing to society. Hence the vast numbers of "street children" that roam the streets robbing and stealing. And some of them have now got knives and guns. Latest crime craze is two armed younguns from a favela riding around on a small motorbike mugging people. The motorbike allows them to rob more people in one evening and make quick getaways.

Only yesterday yet another bank was blown up down in Rio. They use weapons like an RPG which blows the whole bank's frontage out. If not that, they tie chains around an ATM and drag it out of the wall using a 4W drive pickup truck.

In reply to by falak pema

smacker Fri, 06/01/2018 - 11:50 Permalink

Last night, TV Globo here in Brazil were reporting that the truckers strike in 9 states had ended and probably a few more today. The two gas stations (postos) I can see from my verandah have removed their barriers which suggest they have received new fuel deliveries and are open for business.

Whatever, there has always been a deep hard-Left commie constituency in Brazil and the truckers were the front men for it. What they really want to see is an end to free-market economics that Petrobras CEO Parente introduced and for Lula to be back in charge, who is himself an ex-commie (once a commie, always a commie?).

Sadly for them Lula is currently serving a 12 year 1 month prison sentence for corruption including involvement in the Car Wash scandal that wrecked Petrobras.

Michel Temer is no good either and is surrounded by his own corruption scandals.
And it was Temer who lead the campaign to get rid of/impeach Dilma Rousseff.

"Seja bem vindo ao Brasil :-)"
"O Brasil, o país do futuro e sempre será."

AurorusBorealus smacker Fri, 06/01/2018 - 12:21 Permalink

That is good to know.  Hopefully, the worst can be avoided for now.  I have friends who work in Christian missions in the vast Sao Paulo slums who told me that the situation there is near the breaking point.

What can you do when all of the politicians are corrupt Wall-Street puppets or corrupt Communist predators?  I suspect (with others) that the Brazilian military may eventually intervene, as they did in 1964, since neither the socialists nor the capitalists seem capable of forming a functioning government.

In reply to by smacker

smacker AurorusBorealus Fri, 06/01/2018 - 13:14 Permalink

"[...] vast Sao Paulo slums who told me that the situation there is near the breaking point."

Your friends will probably know about the area in São Paulo called "Crack City" which is pretty much a police no-go area.

Drugs have become a serious major problem across the whole of Brazil in recent years and have spurred ever rising violent crime on the streets. I was held up by two armed robbers last year. Fortunately I mananged to fight my way free and flee.

In reply to by AurorusBorealus

smacker jmack Fri, 06/01/2018 - 13:07 Permalink

No,his scandals are not just Leftwing talking points.

As AurorusBorealus says, the allegations are serious and Temer was allegedly directly involved in the Car Wash scandal (Lava Jato) which goes deep and wide and has dragged in political elites on all sides (kick-backs), construction companies (hugely overpriced contracts) and Petrobrás executives (kick-backs).

It cost Petrobrás R$billions grafted out of the company in different ways.

On one occasion TV Globo broadcast a recorded telephone call between Temer and one of the grafters which implicated him when he told the guy to keep quiet about some part of the scandal.

In reply to by jmack

jmack smacker Fri, 06/01/2018 - 13:32 Permalink

   Wont everyone have that type of involvement if they are part of a system that is systemically corrupted?   Did he take or give kickbacks? or was he just told not to expose the uglier aspects of the sausage factory.  And now that he is atop the power structure he is trying to make systemic changes that will disallow future repeats of that corruption, and he is being opposed by the communists that dont care about the corruption, (or want to return to it) if it is going to cost them their subsidies, which are essentially a societal kickback, to buy power in a socialist democrat system?

 

    It seems very similar to the American hypocrisy that ignores Bill Clinton having sexual relations with a 21 year old intern, but think that trump should be cast out of society for uttering the words "grab them by the pussy".

     

In reply to by smacker

smacker jmack Fri, 06/01/2018 - 14:14 Permalink

I suspect Temer is involved in corruption rather like Fernando Collor de Mello was some few years ago. In that case de Mello had a "laundry man" who washed all his ill-gotten gains thru the banks. He was a free-market politician.

Problem was that the laundry man ((knew too much)) and where the papertrail was hidden. He was found dead in bed in a hotel in Macéio apparently having been shot by a prostitute. de Mello was nevertheless impeached.

In reply to by jmack

Dincap Fri, 06/01/2018 - 11:55 Permalink

Brazilian people not particularly clever manipulated by the corrupt judiciary and media  put in charge a gang of criminals starting with the President Temer. The famous Parente worked for dismantling Petrobras and selling her. Though oil is mostly locally produced he applied international prices in a country where most are struggling in order to make a living. Moreover he started importing diesel keeping high prices for making the operation profitable and stopped local production.

dratalux Dincap Fri, 06/01/2018 - 12:39 Permalink

That's why the strike took place. When Fernando H. Cardoso left the Brazilian presidency, Petrobras was among the 10 richest oil company in the world. When President Dilma left, Petrobras became the most indebted oil company in the world. Under Lula/Dilma, Petrobras was ransacked and the people understand Temer was also part of the corruption going on there.

 

In reply to by Dincap

smacker Fri, 06/01/2018 - 12:03 Permalink

Here's a useless snippet of Brazil funnyism:

Car fuel in Brazil is called "gasolina" a bit like the US but unlike the UK where we call it "petrol" (or "gas" for slang).

However, the truckers who deliver "gasolina" in Brazil are called "petroleiros".