CEO of Brazil’s oil and gas giant Petrobras steps down following dustup over dividends

RIO DE JANEIRO (AP) — The head of Brazil’s state-controlled oil and gas giant Petrobras has stepped down, the company said Wednesday, following months of tensions with the federal government.

Petrobras opted not to pay extraordinary dividends to its shareholders earlier this year, souring relations between Petrobras CEO Jean Paul Prates and Brazil’s President Luiz Inácio Lula da Silva, head of the ruling leftist Workers' Party.

Lula had defended that move, calling the market a “voracious dinosaur” after Petrobras' shares plunged following the decision regarding dividends.

The company’s shares fell by as much as 9% after the announcement of Prates’ departure, before paring losses. They were down by 7% by Wednesday afternoon.

Local newspaper O Globo reported that Lula himself informed Prates of his dismissal.

Prates, a former senator for the Workers' Party, will be replaced by engineer and former director of Brazil’s oil and gas regulator ANP, Magda Chambriard. Petrobras appointed the executive director of corporate affairs, Clarice Coppetti, as interim president.

Brazil's federal government has a controlling stake in Petrobras, while private investors also hold shares. That often creates a clash of interests between the government and minority shareholders.

“Magda Chambriard appears to have a more nationalist vision, that is, of Petrobras serving national interests more than those of shareholders,” said Rafael Schiozer, a finance professor at the Getulio Vargas Foundation, a university and think tank.

Prates “had a more pro-market vision — he was more concerned with the company’s value creation,” Schiozer added.

Chief Financial Officer Sergio Caetano Leite will also step down from his role. Petrobras appointed the current finance executive manager, Carlos Alberto Rechelo Neto, as interim, until the election of a new chief financial officer by the board of directors.