Mines and Energy Minister Alexandre Silveira reveals divergences with Jean Paul Prates, defends cuts in gas reinjection and repurchase of sold refineries
06/16/2023
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2023/D/X/2THOOFQAexfz5vYQmyXg/16esp-100-silveira-a18-img01.jpg)
Alexandre Silveira — Foto: Ton Molina/Agência O Globo
Mines and Energy Minister Alexandre Silveira classified as “negligent” the attitude of Petrobras regarding the natural gas policy in Brazil. According to him, “there are inexplicable distortions” in the company’s performance, “also from an ethical and moral point of view.”
Mr. Silveira was reacting to remarks by Petrobras CEO Jean Paul Prates that there was no surplus of gas in the country. “The CEO of Petrobras saying that nothing can be done is, to say the least, negligence for someone who took office five months ago,” the minister told Valor, advocating the “Gás para Empregar” program aimed at reducing fuel prices.
Mr. Prates did not reply to a request for comment. Petrobras has planned to start operating projects that will increase the supply of natural gas in the next few years, but the plan takes time to get off the drawing board. In the current investment plan (2023-2027), the company plans to invest $11 billion to ensure the exploration and production of natural gas. However, the company’s plan needs to include new projects. In addition, it is said that the natural gas reinjected into the company’s wells increases the production of oil, which is commercially more valuable, with reduced CO2 emissions into the atmosphere.
The minister also analyzed the fuel price scenario, the subject of the first clashes between him and Mr. Prates this year. He believes that the end of the tax relief by the government was a courageous act, as was the change in Petrobras’s price policy. After an initial drop, prices went up again after the states reinstated the original ICMS rates. For Mr. Silveira, Petrobras and the other companies in the sector need to burn more fat to ensure lower pump prices.
Specialists advocated the preservation of Petrobras’s import parity price policy, pointing out the risk of political interference in the company. In Mr. Silveira’s view, Petrobras must be profitable, but it must also follow its constitutional duty of considering the government’s public policies. Read the main excerpts from the interview:
Valor: You have announced the Gás para Empregar program; what guarantees do you have that this is not another frustrated attempt to reduce the price?
Alexandre Silveira: The Gás para Empregar program is an obvious policy in Brazil. Nobody in their right mind can deny that the best way to do this is through economic growth. In a country with so much potential as ours, it is essential to reindustrialize, manufacture your products, to value your workforce and your local content is indispensable. And gas is a wealth, an essential asset in the issue of industrialization.
Valor: Are oil companies opposing this program?
Mr. Silveira: It goes completely against their interests. They have never been concerned. Petrobras and all the other oil companies should encourage public policies. The world average for re-injecting gas into oil fields is much lower than the Brazilian average. There is a clear disdain on the part of the oil companies in the country to increase the supply of gas.
Valor: How to face the resistance of the sector?
Mr. Silveira: I even believe that oil companies will put some difficulties at first for us to implement this policy, but as we believe that we get wiser with time, we will reach a consensus.
Valor: How is this resistance perceived in the sector?
Mr. Silveira: I saw a statement from Petrobras CEO [Jean Paul Prates] saying the opposite, that there is no additional supply of gas. This [maintaining current levels of reinjection] is to continue the production at the level they consider ideal, to maximize profit.
Valor: But can this speech, coming from the government, drive investors away from the industry?
Mr. Silveira: After we announced Petrobras’s new price policy, the share price went up, and it is still going up. Investors want Brazil’s largest oil company to be a long-term-oriented company, which does not sell its strategic assets, which is competitive and, regarding refining, which plans to invest in energy transition, but with its feet on the ground, knowing that it has other priorities that precede this matter, which is the modernization of the refineries, to become self-sufficient in gasoline and diesel.
Valor: Petrobras CEO said the Brazilian industry must rely on the gas already delivered or look for new suppliers in other countries and that the reinjection program is justified from a technical and even environmental point of view.
Mr. Silveira: We are talking about expanding gas supply. As for reinjection, North America reinjects 12.5% of the gas, Europe and Asia reinject 21.5%, Africa reinjects 23.3%, while Brazil reinjects 45%.
Valor: Is it possible to reduce the price of gas by 30%?
Mr. Silveira: Brazil has not had a gas policy since the last one, which was launched during Lula’s first term. So, for the CEO of Petrobras, who took office five months ago, to say that nothing can be done is negligent, to say the least. He cannot neglect it and say that nothing can be done. He must at least take the time and dedicate himself and his technical team to it. To do this, I will invite him and his team to come to the ministry to show why Petrobras cannot contribute to Brazil by increasing the supply of gas that will serve the chemical industry, generate jobs and income, and supply the fertilizer industry for greater food security in Brazil, which the president defends so much.
Valor: Your first public disagreement with Jean Paul came during the discussion about fuel prices. It is often said in the market that the CEO of Petrobras, regardless of his background, when he takes the chair, becomes first and foremost an oil worker. Is that the case?
Mr. Silveira: I think so. The role of the Ministry of Mines and Energy is to defend the public policies that we are committed to in an electoral campaign. We want a profitable Petrobras, attractive to investors, but one that fulfills its constitutional duty to consider the public policies that the government wants to implement for the benefit of Brazil.
Valor: In light of these struggles, what is the timetable for the implementation of “Gás para Empregar” program?
Mr. Silveira: One alternatives we have, that has already been proposed and has already been sent to the Chief of Staff Office, is using PPSA [Pré-Sal Petróleo] to exchange the gas, to exchange part of this oil to increase the supply of gas in Brazil.
Valor: Will it be presented to Congress as a provisional measure or as a bill?
Mr. Silveira: Congress is the right place for discussing it. We had a time when provisional measures were not the best way but today, we are, again, moving towards making it possible through provisional measures.
Valor: Do you think the political environment is improving?
Mr. Silveira: These political issues need a maturation period. This moment is starting to calm down. Regardless of specific issues, there is a maturation time of six months of government, it’s a reasonable time for these things to settle down and people start to understand that the platform has been dismantled and that now it’s time to govern.
Valor: Another dispute you are involved in is the oil production in the mouth of Amazon River.
*Por Murillo Camarotto, Rafael Bitencourt — Brasília
Source: Valor International