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Analysis: Technocrat with a deft touch, Petrobras' placeholder CEO may cling on

By Gram Slattery and Rodrigo Viga Gaier
Ivan Monteiro, President of Brazil's state-run oil company Petroleo Brasileiro SA (Petrobras), reacts during a news conference in Sao Paulo, Brazil, September 10, 2018. REUTERS/Nacho Doce

By Gram Slattery and Rodrigo Viga Gaier

RIO DE JANEIRO (Reuters) - Brazil's right-wing President-elect Jair Bolsonaro has thrilled investors with pledges to transform the state's role in Latin America's largest country.

But when it comes to state-run oil firm Petroleo Brasileiro SA, or Petrobras, the radical new approach could start with the new president doing nothing at all.

    In recent days, Bolsonaro's team has said Petrobras Chief Executive Ivan Monteiro may stay on — a novelty at a firm with some 37 CEOs in its 65-year history.

That in turn is drawing attention to Monteiro, the unassuming native of isolated Amazonas state who took over the helm after his predecessor resigned suddenly in June.

Many had seen Monteiro as a placeholder in the final days of lame-duck President Michel Temer's time in office, which ends Jan. 1.

   Investors, analysts and company insiders told Reuters that Monteiro, previously chief financial officer at Petrobras, has a knack for both navigating Brazil's tricky politics and nursing weakened balance sheets back to health.

That combination, honed over decades at state lender Banco do Brasil SA, may prove crucial at Petrobras, whose finances have often suffered as governments used it as a tool for political and policy objectives.

Monteiro's predecessor, the turnaround specialist Pedro Parente, drew a red line on political meddling at Petrobras during his tenure and eventually quit when the government crossed it. In contrast, Monteiro's colleagues say he can work deftly within the system.

   "He knows the financial market well, and he also knows Brasilia," said a high-ranking Petrobras executive, who requested anonymity to speak frankly.

"In addition to being great technically, he has a good rapport with the government," added the executive. "That, I think, makes an excellent profile for the head of Petrobras."

Perhaps as importantly, analysts and investors say, Monteiro has played a central role in Petrobras' efforts to reduce its $88 billion debt load, which has crimped its ability to invest in Brazil's vast new offshore oil finds.

    Monteiro knows the intricacies of an ambitious asset sale program and contentious talks with the government over the so-called 'transfer-of-rights' area, which, if resolved, could bring the company a huge financial windfall.

   "He's involved in all the divestments, he's involved in transfer-of-rights," said Luiz Carvalho, lead Latin America analyst for oil and gas, petrochemicals and agribusiness at UBS. "So at the end of the day, the continuity of Ivan Monteiro would be a positive."

Earlier this month, Monteiro said he had not yet been approached by members of Bolsonaro's team about staying on. His representatives have not made him available for an interview.

Petrobras, Brazil's largest company by market capitalization, employs over 60,000 people, and is a source of national pride. Yet its central role in the "Car Wash" investigation, considered by many to be the world's largest corruption probe, has hurt both its public image and bottom line in recent years.


Monteiro's ability to read the winds in Brasilia may be tested by dramatic cross-currents in the administration of Bolsonaro, who won the presidency in a run-off election last month.

The man who will be economy minister under Bolsonaro, Paulo Guedes, has defended a full privatization of the oil company, while military generals around Bolsonaro oppose such an idea. Bolsonaro himself has said he favors keeping the company in state hands but is open to privatizing certain assets.

Early in November, Bolsonaro said Monteiro would likely be replaced when the new government takes over, as part of the customary changing of the guard at state-run firms.

But soon after, Vice President-elect Hamilton Mourao singled out Monteiro in a message on Twitter, saying he was "very much impressed" after meeting with Petrobras executives. This week, Mourao said Monteiro and others at Petrobras may stay on.

A native of Manaus, a state capital at the heart of the Amazon rainforest, Monteiro worked at Banco do Brasil for decades, rising to the role of CFO from 2009 to 2015.

That was a period when leftist President Dilma Rousseff put intense pressure on state banks to boost credit and lower interest rates.

While state mortgage lender Caixa Economica Federal is still recovering from an overstretched balance sheet, Banco do Brasil managed to stay on steady ground and even improve some measures of profitability.

Those close to Monteiro say that was due to his disciplined cost controls and a talent for complying with the letter of government orders while finding workarounds in spirit.

"If it weren't for him, Banco do Brasil would have turned into Caixa," a banking executive told Reuters in 2015.

When Monteiro arrived at Petrobras that year as its new CFO, some in the market were skeptical, said Carvalho of UBS. In part, that was because his move coincided with that of Aldemir Bendine, then-CEO of Banco do Brasil, who took the top job at the oil firm.

A loyalist to Rousseff, who was impeached and removed from office in 2016 for breaking budget rules, Bendine was convicted this year on corruption charges and is serving an 11-year prison sentence.

However, Carvalho said Monteiro won over skeptics with deft execution of plans to cut debt and rein in operating costs. Since 2015, net debt at Petrobras has been slashed by some $27 billion, while Brazil-listed preferred shares have climbed 360 percent since the beginning of 2016.

Three people around Monteiro described him as "technically minded" - but far from a pushover.

"When it's a subject that he understands well, Ivan doesn't like to hear the word 'No'," said the Petrobras executive, who requested anonymity. "But, in general, he's one to talk with the team quite a bit while making decisions."

(Reporting by Gram Slattery and Rodrigo Viga Gaier; Additional reporting by Marta Nogueira in Rio de Janeiro and Aluisio Alves in Sao Paulo; Editing by Frances Kerry)