Mark NadiloPetrobras, one of the world’s largest oil companies and Brazil’s main state-owned enterprise, has returned to posting losses under the administration of Luiz Inácio Lula da Silva. In the second quarter of 2024, the company reported a consolidated net loss of 2.6 billion reais, marking the first negative financial result since the third quarter of 2020. This downturn in financial performance raises serious concerns about the current management of the company and stands in stark contrast to the results achieved during Jair Bolsonaro’s presidency.
Recent Performance: Losses Under Lula’s Government
Since Lula assumed the presidency in January 2023, Petrobras has faced a series of challenges that have culminated in financial losses.
The most recent situation, with a loss of 2.6 billion reais, was attributed by the company to two main factors:
- Exchange Rate Losses: Exchange rate volatility has negatively impacted the company’s financial results, especially in a global economic environment characterized by uncertainty and internal political instability.
- Agreement with the Union: In June 2024, Petrobras reached an agreement with the Union to settle legal disputes over tax debts estimated at 45 billion reais. While the agreement was necessary to resolve legal issues, it had a significant impact on the company’s finances.
However, internal sources and former executives of Petrobras point to other critical factors, such as the drop in the company’s production, which contributed to the negative result. Although production increased year-over-year, there was a quarterly decline, indicating potential operational problems or a slowdown in extraction and refining activities.
The Contrast with Bolsonaro’s Government
During Jair Bolsonaro’s presidency (2019-2022), Petrobras experienced a period of robust profits and significant growth. Bolsonaro, who adopted a more liberal economic stance, allowed Petrobras to operate with greater autonomy, focusing on cost-cutting strategies, divestments in non-essential assets, and prioritizing more profitable sectors.
The financial results of Petrobras under Bolsonaro’s government were marked by:
- Record Profits: In 2022, Petrobras reported a net profit of 188 billion reais, the highest in the company’s history. This performance was driven by a global environment of high oil prices, combined with a management focused on efficiency and profit maximization.
- Divestments and Focus on Core Business: The strategy of divesting non-essential assets allowed Petrobras to concentrate on its core operations, particularly in oil and natural gas exploration and production, sectors where the company is a global leader.
- Debt Reduction: During Bolsonaro’s government, Petrobras also focused on reducing its debt, using part of its profits to pay off liabilities and improve its capital structure.
Comparison of Results (2023-2024 vs. 2019-2022)
| Year | Government | Profit/Loss (R$ billions) | Commentary |
|---|---|---|---|
| 2022 | Bolsonaro | 188.0 | Highest profit in Petrobras’ history |
| 2023 – 1st Quarter | Lula | -0.8 | First loss under Lula’s government |
| 2023 – 2nd Quarter | Lula | -1.5 | Exchange rate losses and production decline contributed to the negative result |
| 2024 – 1st Quarter | Lula | -1.9 | Agreement with the Union significantly impacted the results |
| 2024 – 2nd Quarter | Lula | -2.6 | Worst result since 2020, impacted by production decline and exchange rate losses |
Implications for Petrobras’ Future
The series of losses has raised questions about Petrobras’ direction under Lula’s administration. Industry analysts and investors are concerned about the company’s financial sustainability and the potential implications of management that seems less focused on efficiency and more susceptible to political intervention.
The decline in financial results could also affect Petrobras’ ability to invest in new technologies, expand its operations, and compete globally in an increasingly competitive sector. Additionally, there are fears that the company could once again become a tool of public policy, which historically led to significant losses and corruption scandals.
See the Petrobras report in full.
Conclusion Petrobras’ Future
Petrobras, which was a model of recovery and growth under Bolsonaro’s government, now faces significant challenges under Lula’s administration. The losses recorded in 2023 and 2024 are a warning about the risks of state management that may be more focused on political agendas than on efficiency and profitability.
The future of Petrobras will depend on the government’s ability to reverse this negative trend and adopt policies that encourage the company’s sustainable growth, avoiding it becoming a financial burden for the country. The impact of these decisions will be felt not only in the company’s performance but also in the Brazilian economy as a whole.
