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Petrobras announces mega dividends for shareholders

A few hours before disclosing its Q3 2022 results, Brazilian oil and gas giant Petrobras announced that its board of directors approved the payment of dividends to a total of BRL 43.68 billion (USD 8.5 billion), with each preferred and common share at BRL 3.35.

Dividends will be paid in two equal installments in the amount of BRL 1.67 per share. The first one will be on December 20 and the second on January 19.

“Approval of the proposed dividend is compatible with the company’s financial sustainability in the short, medium, and long term and is in line with the commitment to generating value for society and shareholders, as well as the best practices of the global oil and natural gas industry,” informed the company in a statement.

Petrobras also highlights that the proposed dividend is in line with the shareholder remuneration policy, which provides that, in the case of gross debt of less than USD 65 billion, the company may distribute to its shareholders 60 percent of the difference between the operating cash flow and acquisitions of fixed and intangible assets.

Earlier this morning, the Brazilian press reported that Petrobras was set to pay mega dividends of up to 50 billion to be distributed as an advance of the company’s future profits.

Per newspaper Valor, this amount, added to the BRL 130 billion already distributed this year, would be more than four times the volume of investments made by the state-controlled company in 2022.

In that scenario, of the total to be distributed this Thursday, about BRL 20 billion would go to the federal government, the company’s biggest shareholder. In the first half of the year, the government received around BRL 50 billion in Petrobras dividends.

The payout could be the first impasse in the transition from President Jair Bolsonaro’s administration to the government of President-elect Luiz Inácio Lula da Silva, a process that also began today.

Since last year, Petrobras has paid dividends to shareholders in advance. In a letter sent to state-owned companies in July, the Economy Ministry had also asked for an increase in dividend income to cover the expenses of a constitutional amendment that allowed for beefed up social welfare payments, as a strategy to gain electoral support.

Now, Lula’s transition team, led by Vice President-elect Geraldo Alckmin, wants to change the way these payments are made. According to O Globo, the transition will try to prevent these dividends from being approved.

Congresswoman Gleisi Hoffmann, Chair of the Workers’ Party, said on her Twitter account that “after the election, the bloodletting at Petrobras returns” pointing out that the party does not agree with “this policy that takes away the company’s investment capacity and only enriches shareholders.” In her view, Petrobras must serve the Brazilian people.

In addition, oil workers federation FUP and the association that represents minority oil workers in state-owned companies Anapetro, informed they would go to court if Petrobras’s board approves the dividend distribution.

“With the dividends of this third quarter alone, of around BRL 50 billion, it would be possible to buy back the Rlam and Six refineries, complete the works at Abreu Lima, Comperj, UFN-3, and the reopening of Fafen-PR [units]and still there would be money left over for other investments,” highlighted FUP officer Deyvid Bacelar.

Besides that, per specialists of the Advocacia Garcez law firm, which represents the associations in court, any decision on dividends should be up to the company’s future management.

“The legislation also determines that the approval of dividends is the responsibility of the annual general meeting, and not of the company’s board of directors,” they added. Petrobras’ next general meeting is scheduled for next year, under the management of the Lula government.

Among those tipped to take over at Petrobras is Senator Jean Paul Prates. In a public hearing in July, he said he is not opposed to distributing dividends, but he disagrees with them being handed out in their entirety.

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