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20% Drop In Stocks Of Petrobras Following Resignation Of CEO And A Workers’ Strike

20% Drop In Stocks Of Petrobras Following Resignation Of CEO And A Workers’ Strike
Following the Brazilian government being forced to reduce diesel prices after pressure form a nation wide truckers’ strike, Pedro Parente, the chief executive officer of the state owned oil producer of the country – Petroleo Brasileiro, resigned from his post.
The resignation coincides with a three day strike by Brazilian oil sector workers. Apart from the resignation of the chief executive of the company, the striking workers are demanding an end to the policy that allows oil companies to set prices of oil according to international market prices.
There was a drop of more than 20 per cent in the stocks of the company which is commonly known as Petrobras, in midday trading on Friday, after the resignation of the chief executive. After Parente's resignation, trading in the stock was suspended in Sao Paulo.
The company's other top executives will remain and the board of the company would choose an interim CEO in place of Parente, the company said in a statement.
He "delivered what he promised" when he took over Petrobras two years ago. Parente said in his resignation letter
He however also mentioned that his continuation with the company no longer provided a positive light to the company with respect to the nation wide strike by the truckers that had brought the Brazilian economy to a grinding halt.
A plan that would allow the company to review and set fuel prices more frequently was unveiled by Petrobras last June. International benchmark crude futures have been fixing the fuel prices for the company for over a year now.
There has been a wave of discontent in Brazil after the surge in fuel prices in the country because of the surge in oil futures which has touched a 3½-year high and is now trading internationally at over $80 a barrel.
The aim of Parente has been to cause a turnaround in the fortunes of the Brazilian energy giant ever since he had taken over the reigns of Petrobras in May 2016. The hugely impactful corruption scandal in the country that resulted in the imprisonment of former President Luiz Inacio Lula da Silva has also resulted in the Petrobras becoming one of the world's most indebted oil company.
 According to media reports, the total debt of the company in the first quarter of 2018 was to the tune of 270.71 billion reais, or $76.23 billion, and the company had bene successful in slowly reducing that debt burden under the leadership of Parente. The media had also reported that the largest quarterly profits in five years was also reported by the company during the same quarter.
The focus of the turnaround strategy of Parente for the company was concentrated on making complete use of the crude oil production that lies off the coast of Brazil and is situated under thousands of feet of salt. The key to keeping Petrobras productive would be to ensure that the company managed high production levels and low costs of extraction for the so called pre salt production process, he had said in an interview last November.

Christopher J. Mitchell

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