Petrobras Chairman Ferreira to take Leave

Murilo Ferreira will take a leave of absence as chairman of state-run oil firm Petrobras, turning his full attention to his job as chief executive of Vale SA as the mining giant grapples with a downturn in the sector.

 

Petroleo Brasileiro SA, as the company is formally known, did not give a reason for Ferreira's leave, which it said would last until Nov. 30. A company source told Reuters he had requested time off to focus on Vale as it navigates a slump in iron ore prices and a slowdown in China.

Ferreira, 62, who has been CEO of Vale since 2011, was appointed chairman of Petrobras in April as it looked to send a market-friendly signal after a giant corruption scandal resulted in billions of dollars in writedowns.

 

At the time some mining executives criticized the move, saying Vale was going through a difficult patch and needed the full focus of its CEO. Ferreira shrugged off concerns, saying the double job would only eat into his "leisure time." But the world's largest producer of iron ore has continued to struggle. Shares in Vale have lost nearly 40 percent over the past 12 months and touched their lowest in a decade last month.

 

Analysts predict the price of iron ore, the main ingredient in steel, will stay low for years after falling more than half since last year. Despite being one of the world's lowest-cost producers of the mineral, Vale has found itself in a tight spot as its investments are well above those of Australian rivals BHP Billiton and Rio Tinto. Vale is in the process of building a giant iron ore mine in the Amazon known as S11D. The expansion is the world's largest iron ore project at the moment.

 

Since taking the helm of the Petrobras board, Ferreira has not always seen eye to eye with other board members.

 

Last month the board approved the sale of the company's BR Distribuidora SA fuel distribution unit to help reduce debt, but Ferreira was one of two members to vote against the proposal. On Monday, the Petrobras source said the sale had been put on hold.  Another potential point of tension is fuel-price policy. Reuters reported in August, citing sources, that Petrobras had still not presented a plan to bring domestic fuel prices in line with world levels. In the past Petrobras has imported fuel to sell at a loss, a serious burden on the company.

(Reuters: By Stephen Eisenhammer and Rodrigo Viga Gaier, Reuters)

 

Murilo Ferreira graced the cover of Maritime Professional. http://magazines.marinelink.com/Magazines/MaritimeProfessional/201205/flash/