Page 5 - LatAmOil Week 46 2022

LatAmOil COMMENTARY LatAmOil

New vision for the future To be sure, his decision is motivated partly
The incumbent and the president-elect also have by the desire to distinguish himself from his
very different visions of what future they believe predecessor, not just with respect to advocating
Petrobras should pursue. for climate policies but also with respect to cul-
Bolsonaro’s priority has been to maxim- tivating ties with the international community.
ise the NOC’s profitability, and to that end his Indeed, he stressed the latter point explicitly
administration pursued policies that focused during a recent speech in Brasilia, saying: “One
on the company’s biggest money-maker – large- of the main things that I’m going to do is to put
scale upstream projects in the pre-salt section of Brazil back at the centre of international geopol-
the offshore zone. In support of the same goal, itics. I will have more talks with world leaders in It would not be
it also sought to help Petrobras streamline its Egypt in a single day than Bolsonaro has had in
operations. It pushed the company to divide its four years.” surprising if
asset portfolio up into core and non-core cate-
gories, start putting non-core assets up for sale Signs from COP27 Lula announced
and then invest the proceeds of those sales into But events at COP27 show that there is more at
core operations. stake than just Lula’s desire to be different from soon that his
Since then, Petrobras has divested a number Bolsonaro. team plans to
of non-core assets, including refineries and nat- As Foreign Policy has noted, the presi-
ural gas pipeline networks, and has raised bil- dent-elect also delivered a speech at the confer- make significant
lions of dollars in the process. The process has ence that leaned heavily on a paper drawn up by
not been as smooth, rapid or profitable as Bol- two members of his transition team. That paper changes at
sonaro’s administration might have hoped, but it called for gradually transforming Petrobras into
has certainly coincided with a series of increases an energy company that focuses on renewables – Petrobras
in the company’s productivity and profitability. not an oil and gas company, but an energy com-
Lula, by contrast, has signalled that he will pany that concentrates mostly on solar, wind
not view profitability as the key measure of and hydropower and treats oil, gas and related
Petrobras’ success. Instead, his administration businesses as a sideline.
will probably treat the company more as an As such, it would not be surprising if Lula
instrument of policy. That is, it will view the announced in early January – or even in the
NOC as a tool with at least four basic functions: run-up to his inauguration – that his admin-
1) to manage a specific set of strategic natural istration plans to make significant changes
resources and industrial operations that belong at Petrobras. If so, it will be time for industry
to the state; 2) to manage the money invested in observers to review forecasts about the NOC’s
and earned from those natural resources and future performance, as the company is unlikely
industrial operations; 3) to manage the goods, to keep setting oil and gas production records if
services and personnel involved in all these it is instructed to direct its focus elsewhere. ™
endeavours; and 4) to represent the state’s inter-
ests in all these endeavours.

Another top priority
The president-elect has also talked about Petro-
bras having another core function – namely,
facilitating the transition from fossil fuels to
renewable energy. During his campaign, for
example, he criticised the NOC for not following
the example of other large oil and gas companies
such as TotalEnergies (France) and Shell (UK)
in revamping their business strategies to focus
more broadly on energy, including renewable
energy along with fossil fuels.
This wasn’t just a campaign slogan. Since his
victory in the run-off election, Lula has given
indications that his administration may seek
to identify the energy transition, along with the
climate concerns that are driving calls to elimi-
nate hydrocarbon consumptions, as one of the
company’s highest priorities.
One of the strongest signs of this may be
the fact that his first international trip since the
run-off has been to the COP27 international cli-
mate summit in Sharm El-Sheikh, Egypt. Even
though Lula is not due to be inaugurated as pres-
ident until January 1, 2023, and is not present in
COP27 in an official capacity, this is his first bid
to speak for Brazil on the global stage centres on
climate issues – at least during this term, given
that he also served as president in 2003-2011. Lula drew global accolades from his COP27 speech (Image: Twitter/@LulaOficial)

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