PBR Petroleo Brasileiro ADR

By Rogerio Jelmayer and Luciana Magalhaes 

SÃO PAULO -- Brazil's acting president, Michel Temer, appointed a new head of the country's state oil company Petróleo Brasileiro SA as part of a broad shuffle of top government jobs.

Pedro Parente, formerly the top executive at the Brazilian unit of U.S. agribusiness giant Bunge Ltd. and currently chairman of stock-market operator BM&FBovespa SA, will take over the helm of a company that is at the center of a massive corruption scandal that has shaken the foundations of the country's political class.

At Petrobras, Mr. Parente's most urgent tasks will be to restore confidence in the company and repair its finances after it was forced to write off billions of dollars in alleged bribe payments and overbilled projects.

Mr. Parente, who also served on the board of Petrobras from 1999 to 2003, succeeds Aldemir Bendine, who arrived at the company 15 months ago following a stint as CEO of state-controlled Banco do Brasil SA.

Belligerent unions have hindered the company's effort to cut costs, while low global oil prices have depressed prices for assets Petrobras has put on the block and slowed Mr. Bendine's progress in a crucial divestment program.

Of $15 billion that Petrobras hopes to raise in 2015 and 2016 by selling assets, the company has so far managed to raise only about $2 billion.

Mr. Bendine won some plaudits for his early work at Petrobras. When he arrived at the company last year, Petrobras' situation was so bad that its auditors were refusing to sign off on its financial statements due to the corruption investigation.

Guilherme Figueiredo, a money manager at M. Safra & Co. in São Paulo, said Mr. Bendine "did a good job in an emergency, cleaning up the company's balance sheet." But he struggled to move the company forward due to his lack of experience in the oil sector, Mr. Figueiredo added.

In addition to the corporate experience he gained during his stint at Bunge, which he left in 2014, Mr. Parente brings a range of government experience to the job. Under the center-right government of former Brazilian President Fernando Henrique Cardoso, Mr. Parente served as chief of staff and deputy finance minister.

With Mr. Parente in charge, Mr. Figueiredo said that he will consider buying shares in Petrobras again. M. Safra & Co. manages about 4 billion reais ($1.12 billion) in assets and sold all its holdings in Petrobras several years ago, Mr. Figueiredo.

"He has a good idea of how the public machinery works, that's very positive, and he knows the other side too because he worked in the private sector," Mr. Figueiredo said.

Others say it is still too early to guess what changes Mr. Parente might make at the company, or if he will be an improvement over Mr. Bendine. And expectations for incoming Petrobras chiefs have sometimes proved overblown.

Mr. Bendine's predecessor, Maria das Graças Silva Foster, was highly regarded in the oil industry for her vast technical knowledge, decades of experience at Petrobras and close relationship with President Dilma Rousseff, who stepped aside last week after the senate voted to proceed with an impeachment trial.

But Ms. Foster failed to improve the company's financial situation because she wasn't permitted to pass high international fuel prices on to consumers at a time when Brazil's government was battling inflation. So Petrobras burned billions of dollars subsidizing gasoline and diesel imports.

"Whenever there's a change, there's an expectation of an improvement, but in this case you can't be sure unless you know Michel Temer's plans for Petrobras," said John Forman, a longtime Brazilian oil consultant and former director of Brazil's National Petroleum Agency. "Temer took office a few days ago and right now he has a lot more problems than solutions."

In televised remarks after his appointment, Mr. Parente said the acting president had given him a clear remit to change the culture at Petrobras. "There will be no political appointments inside Petrobras," Mr. Parente said, referring to a practice that has long allowed the government to meddle in Petrobras' affairs and at times fueled corruption. "That was a clear request from Michel Temer. That will make my life easier and the board's as well."

--Paul Kiernan contributed to this article.

Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com and Luciana Magalhaes at Luciana.Magalhaes@dowjones.com

(END) Dow Jones Newswires

May 20, 2016 02:48 ET (06:48 GMT)

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