As bosses of oil majors go, José Sergio Gabrielli stands out as unusual. The chief executive of Petrobras, Brazil's part-public, part-private oil and gas giant, Gabrielli took up left-wing politics at the age of 15. After spending six months in prison under a military dictatorship, he switched to the less contentious field of macroeconomics, obtaining a doctorate from Boston University and a post as a professor at a Brazilian university (from which he is on leave).
Returning to left-wing politics in the 1980s, he sought office under President Luiz Inacio Lula da Silva's Workers' Party. But since 2005 he has run the most ambitious oil company in the world. Petrobras is the main developer of the biggest new oilfield discovered this century, deep beneath the Atlantic Ocean.
Political connections are essential for Petrobras. Although 60 percent of its shares are traded, the federal government is still its controlling shareholder. Its board is chaired by Lula's chief-of-staff, Dilma Rousseff. But politics can also lead the company into trouble. Brazil's Congress recently set up a committee to investigate Petrobras in response to allegations of padded contracts and political motivation in the company's charitable activities.
Gabrielli says he welcomes the investigation as a chance for the public to scrutinize Brazil's biggest company but worries it will become a political circus, as such congressional committees often do.
Petrobras has already provided 10,000 pages of evidence to disprove the allegation that it overpaid for work on a new refinery. There will be many more such accusations, and they are likely to create an impression of wrongdoing even if nothing is actually proven.
A second uncertainty facing Petrobras concerns a new legal framework governing further exploration for "sub-salt" oil (the new fields lie underneath a layer of salt below the seabed). A committee set up by the government to study this is due to report shortly. It is expected to propose vesting all unassigned rights in the subsalt area (62 percent of the total) in a new, wholly state-owned, company which would partner with Petrobras or any other firm that signs exploration contracts.
Different government factions favor earmarking the revenue from these partnerships for education or infrastructure, whereas other officials want it to go into the general federal coffers. One danger for Brazil is that the new company will be a lucrative shell with no real function except to satisfy the avarice of politicians. The biggest peril for Petrobras would be if the new outfit becomes a commercial rival.
Petrobras is pressing ahead with an ambitious plan to invest $174 billion over the next five years. Critics question how much of this will materialize. But Gabrielli says that even if the oil price falls to no more than $45 a barrel, the $30 billion that he has raised this year will be enough to fund plans for the next two years. If the oil price is at $65 a barrel, the company can fund plans for the next five years. In addition to developing the new fields, it wants to build five new refineries, to generate more electricity and to build a network of gas pipelines in Brazil.
