Bolsonaro declares ‘war’ on state oil company

Brazilian President Jair Bolsonaro declared “war” on government oil company Petrobras during a live online broadcast Thursday night over what he called “absurd” profits that amounted to the “rape” of the Brazilian people.

Petrobras is a majority government-owned oil company with some private shareholders. Out of respect for the latter, Bolsonaro, a conservative, said he would not intervene directly to lower gasoline prices, but warned that Brazil would ‘break’ as a country if the company didn’t lower. not prices and accepted slightly lower profit margins in interest. of the greatest good.

English-language media covering Bolsonaro’s comments noted that he is running for re-election this year against ex-Socialist President Luiz Inácio Lula da Silva this year, who used his power to force Petrobras to lower prices (and was found guilty of charges related to a sprawling corruption scandal in which Petrobras was a main player). However, Bolsonaro argued with the oil company for much of the last year over fuel prices and fired its CEO in March.

“People are pleading with Petrobras not to readjust the price of gasoline. You are raking in absurd profits,” Bolsonaro said during the online broadcast on Thursday. “She [Petrobras] should have a social function. Petrobras, we are at war. Petrobras, don’t raise the price of gasoline. Your profits are rape, are nonsense.

“Many oil companies around the world have cut prices, lowered profit margins for their businesses. Why? To help their country not break apart,” Bolsonaro continued. “Brazil, if they have another price increase, they can break. And Petrobras staff don’t understand, or don’t want to understand, or just want to make a profit.

“I am appealing to Petrobras because I have no way to interfere – look at the abusive profits you have. It is so true that it is abusive that they have grown with the price of oil abroad Who pays the bill? The Brazilian people,” railed the president.

Bolsonaro noted that polls showed the Brazilian people approved of government intervention to lower gasoline prices, but called it “irresponsible.”

“This is what the government of Dilma [Rousseff] and Lula, in particular, did too,” Bolsonaro said. “And that caused Petrobras to have 900 billion [reais, $178 billion] on interference in the price of gasoline, among other actions aimed at corruption. It is not a question of intervening. »

“On the other hand, I can’t understand, I could be wrong, Petrobras during the pandemic crisis and the war abroad [presumably, the war in Ukraine], benefiting enormously. Petrobras’ profits have increased with the crisis. It is a crime, unacceptable,” Bolsonaro said. “I could be wrong, but I can’t understand.”

The chairman said Petrobras was achieving up to 30% profit margins while companies like BP and Shell were achieving between 10 and 15% profit margins. Bolsonaro predicted that Petrobras’ profits in the first quarter of 2022 could reach 40 billion reais ($7.9 billion). Later Thursday, Petrobras reported 44.56 billion reais ($8.86 billion) in first-quarter profits.

A Petrobras gas station near the Christ the Redeemer statue in the south area of ​​the city on March 12, 2022 in Rio de Janeiro, Brazil. (Buda Mendes/Getty Images)

Financial content service Seeking Alpha warned that “former president and criminal” Lula da Silva winning the presidency would potentially reduce those profits because of his record as president between 2003 and 2011, as Bolsonaro mentioned.

“During his first presidency, Lula demanded that Petrobras sell diesel and gasoline below market prices, causing losses in the downstream segment of the business,” Seeking Alpha explained. “A lot has changed at Petrobras (PBR) since then, as Brazil has developed its offshore resources by partnering with Shell (SHEL), Total (TTE) and other majors. Brazil is now a major oil exporter. Nevertheless, the risks associated with the upcoming elections weigh heavily, causing many investors to shy away, despite incredible dividend payouts.

Lula da Silva and his successor and protege Dilma Rousseff presided over the country (and Petrobras) in the execution of a years-old multiparty corruption scheme known as “Operation Car Wash” in which the federal government has overpaid private companies for public works projects in exchange for the companies giving the money back to politicians. Lula was found guilty and sentenced to up to 25 years in prison for buying a luxury beachfront property with money flowing through “Operation Car Wash”, but the top court, the Tribunal Federal Supreme Court (STF), overturned his conviction last year, allowing him to run against Bolsonaro.

Lula first responded to a corruption investigation by comparing himself to Jesus; this week, while running against Bolsonaro, he compared himself to NFL legend Tom Brady in an interview with Weather magazine.

Bolsonaro spent months demanding that Petrobras cut profit margins slightly to help Brazilians afford fuel and fired the company’s chairman, Joaquim Silva e Luna, in March. Bolsonaro blamed Silva [no relation to Lula] for worsening inflation and other financial problems.

“In early March, Petrobras raised the price of gasoline by 18.8% and diesel by 24.9%, citing the “global rise in the price of oil and its derivatives as a result of the war between Russia and Ukraine,” Agence France-Presse (AFP) reported at the time.

Shortly after, Petrobras named its third president in a year, Jose Mauro Coelho.

Brazilians will elect their president in October.


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