(Bloomberg) -- Petrobras Chairman Pietro Mendes will leave the oil producer to become a director at Brazil’s oil regulator, three people familiar with the matter said, leaving investors uneasy about the company’s dividend policy.
Bruno Moretti, who works with President Luiz Inacio Lula da Silva’s chief of staff Rui Costa and is seen as close to the ruling Workers’ Party, is likely to replace Mendes, according to two of the people. They all asked for anonymity to discuss decisions that haven’t been made public yet.
Shares of Petroleo Brasileiro SA fell as much as 1.3% on Wednesday after O Globo was first to report on the plan. Under Mendes, Petrobras has rewarded shareholders with robust dividends, and investors are sensitive to any signs of government meddling in state-controlled companies.
Once officially appointed by Lula, Mendes will be submitted to Brazil’s senate. If approved, he’ll replace the oil regulator’s current head, whose term ends in December. Mendes started his career as an official at the regulator and would have a five-year term.
Investors will be keeping a close eye on any changes to Petrobras’ policies on dividends and fuel prices. Latin America’s largest oil producer is currently pursuing a $111 billion five-year spending plan to expand oil production and refining, and it needs to strike a balance between paying dividends to the government and minority investors, while also meeting its investment targets.
--With assistance from Peter Millard and Leda Alvim.
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