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Bolsonaro fires Petrobras CEO who warned of diesel disaster

Bolsonaro additionally known as for the election of a brand new board, based on an announcement launched near midnight native time on Monday by the state-controlled firm, opening the way in which to a full government administration shake-up.

José Mauro Ferreira Coelho is the third Petrobras CEO fired by Bolsonaro over gas costs. The president, who’s looking for re-election in October however lagging in polls, says Petrobras ought to use its income to cut back gas costs and assist management inflation.

Bolsonaro, who additionally fired an power minister earlier this yr, appointed Caio Mario Paes de Andrade to switch Coelho.

The authorities controls Petroleo Brasileiro, because the agency is formally identified, with a majority of the voting shares, even when personal traders personal greater than 60% of the corporate.

First on CNN: White House explores tapping emergency diesel reserve to ease price spike

Brazil is coming into a vital window to safe diesel provides and Petrobras administration alerted the federal government final week that pumps might run dry throughout the important thing soybean harvest season if the corporate didn’t promote gas at market costs, based on 4 individuals near discussions and an inside presentation seen by Reuters.

Petrobras mentioned that the agency and different importers would battle to safe diesel amid essentially the most extreme scarcity of the gas in 14 years, the sources mentioned.

Analysts, personal importers and officers at oil regulator ANP have echoed these issues, mentioned individuals accustomed to the talks, who requested anonymity to debate the politically delicate matter.

The Petrobras presentation flagged the danger of scarcity within the third quarter, when diesel demand surges seasonally in Brazil in addition to within the United States. The South American nation begins delivery the world’s largest soybean crop in August.

“If there is no signal of market prices ahead, there is material risk of a diesel shortage during the peak of demand during the harvest season, affecting Brazil’s GDP,” Petrobras mentioned within the presentation titled “Fuels: challenges and solutions” and dated May 2022.

Petrobras didn’t reply to a request for remark.

Diesel provide has develop into a world concern since sanctions in opposition to Russia reshaped gas commerce and despatched worldwide inventories to historic lows. Importing nations are sizing up the danger of each rising prices and provide operating quick, because the trade shuts refineries for repairs or to chop carbon emissions.

Concerns in Brazil about diesel imports within the second half of the yr rose after U.S. Gulf refiners, its main suppliers, began redirecting cargoes to Europe, two of the sources mentioned.

“Global diesel inventories are far below the historic average,” Petrobras mentioned within the presentation shared with the Ministry of Mines and Energy. “Petrobras alone cannot solve the global rise of energy prices.”

Energy Minister Adolfo Sachsida on Friday known as oil analysts to ask about diesel shortages within the second half of the yr, mentioned an individual instantly concerned within the matter. The ministry didn’t reply to a remark request.

“If Petrobras stops selling diesel at international prices for more than two or three weeks, there is a chance pumps will run dry,” a high government from a big diesel producer mentioned.

Suggesting subsidies

Executives at Petrobras, whose bylaws bar it from promoting gas at a loss with out compensation, prompt within the presentation that Brazil might minimize taxes or in any other case subsidize fuels to customers, citing the instance of a number of European Union nations.

Fuel subsidies value Brazil about 7.5 billion reais ($1.6 billion) in 2018, when former President Michel Temer applied them for a number of months to halt a nationwide trucker protest.

The value of an analogous measure this yr might surpass 60 billion reais, estimated one of many individuals near the discussions.

Russia’s invasion of Ukraine despatched crude oil costs to a 14-year excessive. This month, international shortages led diesel merchants to pay a premium of greater than $50 per barrel.

At their most, Brazilian diesel inventories can cowl a few month of nationwide demand. At Petrobras, provides are at about half capability, based on two sources.

Brazil books cargoes in June for the August-October soybean harvest, when most grains attain port by way of lengthy trucking routes.

The firm has begun turning to extra distant suppliers in Western Africa and India, one of many sources mentioned. But whereas a Gulf diesel cargo takes two to 3 weeks to reach in Brazil, a ship from India might take 45-60 days.

“If refineries in the U.S. get damaged during the hurricane season, or anything else contributes to a tighter market, we could be in real trouble,” a Petrobras government mentioned on situation of anonymity.

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