Petróleo Brasileiro S.A. - Petrobras
Oil & Gas Exploration and ProductionFounded 1953- Updated June 2026
Reviewed by Swet Parvadiya
Last reviewed: June 2026
CorpDigest
Petróleo Brasileiro S.A. - Petrobras
Company History
Founded 1953 in Rio de Janeiro, Brazil
Last reviewed: 2026-06-09 · By Swet Parvadiya
On October 3, 1953, President Getúlio Vargas signed the law establishing Petróleo Brasileiro S.A. — Petrobras. The decision came after years of political debate about who should control Brazil's oil. Vargas chose the state, with the slogan "O petróleo é nosso" — the oil is ours. The company was created as a monopoly with an explicit mandate to develop Brazil's hydrocarbon resources for the benefit of the Brazilian people.
The early decades were defined by exploration with uncertain results. The Garoupa field discovery in 1974 in the Campos Basin established the offshore direction that would eventually lead to pre-salt. The 1997 end of the state monopoly opened Brazilian oil exploration to international companies — but Petrobras had spent forty years building the institutional knowledge, the engineering expertise, and the operational infrastructure that no foreign entrant could replicate quickly.
NYSE listing in 2000 brought international capital and reporting standards. The 2007 discovery of the pre-salt layer was the moment that changed everything. Geologists had suspected the formation existed; confirming it, understanding its scale, and then developing the technology to extract it efficiently took another decade of sustained investment and engineering innovation.
The Car Wash scandal beginning in 2014 revealed a $2.1 billion bribery network connecting Petrobras's executive board to political parties and construction companies. The entire executive board was imprisoned. A $3.1 billion settlement followed. The company's debt peaked, its credit rating was cut, and its international reputation took years to recover. What survived the scandal was the pre-salt geology — which no political crisis could dissolve.
Getúlio Dornelles Vargas was a Brazilian lawyer and politician who served as President of Brazil from 1930 to 1945 and again from 1951 until his suicide in 1954. Operating during a period of intense nationalist sentiment and economic protectionism, Vargas recognized the strategic importance of domestic oil production for Brazil's industrialization and national security. His decision to champion the 'O Petróleo é Nosso' (The Oil is Ours) campaign was a pivotal moment in Brazilian history, as it mobilized the public and the military to support the creation of a state-owned oil monopoly, overriding the opposition from liberal economists and foreign oil companies. The signing of Law 2,004 on October 3, 1953, which established Petrobras, was the culmination of this campaign and represented a fundamental shift in Brazil's economic policy, from one of reliance on foreign capital to one of state-led development. Vargas's legacy is the creation of a powerful state-owned enterprise that would become the engine of Brazil's industrialization and the source of the country's vast oil wealth, a legacy that continues to shape the company's strategic direction and its relationship with the federal government today.
Henrique Alberto da Costa Lage was a Brazilian engineer and industrialist who is widely considered the father of the Brazilian oil industry. Operating during the early 20th century, when the global oil market was dominated by foreign majors like Standard Oil and Royal Dutch Shell, Lage recognized the potential for domestic oil production in Brazil and invested heavily in the construction of the country's first oil refinery in the state of Bahia. His decision to challenge the foreign monopoly was a bold move that attracted the attention of the international oil companies, who responded by launching a price war that ultimately forced Lage to sell his assets to Standard Oil in 1928. Despite this setback, Lage's early geological surveys in the Recôncavo basin provided the initial proof of concept that Brazil possessed commercial oil reserves, and his advocacy for a national oil policy influenced the subsequent generation of Brazilian leaders, including Getúlio Vargas. Lage's legacy is the inspiration he provided for the 'O Petróleo é Nosso' campaign and the creation of Petrobras, a legacy that is honored by the company's continued focus on domestic oil production and technological self-sufficiency.
President Getúlio Vargas signs Law 2,004 on October 3, 1953, establishing Petrobras as a state monopoly over the exploration, refining, and transportation of oil in Brazil, following the populist 'O Petróleo é Nosso' campaign.
Petrobras discovers the Garoup field in the Campos basin, the first major offshore oil discovery in Brazil, which transformed the company from a marginal domestic producer into a major international oil company and provided the capital necessary to invest in deepwater technology.
President Fernando Henrique Cardoso enacts the Oil Law, ending Petrobras's state monopoly and allowing foreign companies to compete for exploration blocks in Brazil, forcing the company to adopt international accounting standards and implement a formal corporate governance structure.
Petrobras lists its shares on the New York Stock Exchange, raising $1.8 billion in capital and becoming the first Brazilian company to achieve a significant listing on a US exchange, marking its integration into the global capital markets.
Petrobras discovers the pre-salt layer in the Santos basin, a massive geological formation containing an estimated 50 billion barrels of recoverable oil equivalent, which transformed the company into one of the most valuable companies in the world.
Petrobras's market capitalization peaks at $300 billion in 2010, making it the fourth most valuable company in the world, driven by the massive pre-salt discoveries and the high price of crude oil.
The Brazilian federal police launch the Car Wash investigation, revealing a $2.1 billion bribery scheme involving Petrobras's executive board, political parties, and construction companies, leading to the imprisonment of the entire executive board and a $3.1 billion settlement.
Petrobras's gross debt reaches a peak of $108 billion in 2016, driven by the overinvestment cycle of 2011-2014 and the loss of access to international capital markets following the Car Wash scandal, forcing the company to implement a massive asset divestment program.
Petrobras adopts a new business model focused on deepwater E&P and asset light operations, initiating the divestment of non-core assets including eight refineries, distribution networks, and natural gas pipelines, reducing the company's workforce by 35,000 personnel.
Petrobras distributes a record $19.0 billion in dividends to shareholders in 2022, the largest dividend payout in the company's history, reflecting the massive cash flow generation from the pre-salt assets and the successful debt reduction program.
The Brazilian environmental agency IBAMA denies the drilling license for the Foz do Amazonas exploratory well in July 2023, jeopardizing a $12 billion deepwater exploration frontier and triggering a $1.2 billion legal dispute.
President Luiz Inácio Lula da Silva appoints Magda Chambriard as CEO of Petrobras in April 2024, marking a shift toward a more state-aligned strategy focused on domestic refining self-sufficiency and increased government control over the company's operations.
Petrobras acquired a 50 percent stake in the Bahia Wind Complex, a 1.2 gigawatt offshore wind farm, to complement its thermoelectric portfolio and provide a comprehensive low-carbon energy offering that can compete with the integrated energy companies like Shell and BP.
Petrobras acquired the biogas assets of Biogas Brazil, a developer of landfill and agricultural waste-to-energy facilities, to secure rights to 1.2 million cubic meters of annual biogas production, a critical technology for the company's decarbonization strategy.
Petrobras exercised its right of first refusal to acquire a 15 percent additional working interest in the Búzios field, the largest pre-salt accumulation in the Santos basin, increasing its total working interest to 85 percent and securing its long-term production growth.
Petrobras was established on October 3, 1953 when Brazilian President Getulio Vargas signed Law 2,004, creating Petroleo Brasileiro S.A. as a state-controlled oil company with a constitutional monopoly on exploration, production, refining, and transportation of oil in Brazil. The law followed a multi-year nationalist political campaign captured by the slogan O petroleo e nosso (The oil is ours), which mobilized students, military officers, labor unions, and intellectuals against foreign oil majors and culminated in mass demonstrations during 1947 to 1953. The slogan became one of the most powerful political brands in 20th-century Brazil. Vargas committed suicide on August 24, 1954 amid a political crisis, leaving Petrobras as part of his nationalist legacy. The company began operations with the Mataripe refinery in Bahia and limited onshore production from the Reconcavo Basin. Through the 1950s and 1960s Petrobras built a vertically integrated national oil company, founded the Cenpes research center in 1963, and added new refineries (Cubatao, Duque de Caxias, Paulinia). The monopoly framework lasted until 1997 when Constitutional Amendment 9 ended the exclusive rights, though Petrobras retained dominant market position and majority government ownership. Pre-salt discoveries beginning in 2006 transformed the company into one of the largest oil producers globally, but the monopoly heritage and political ownership structure remained central to its identity.
The pre-salt is a vast hydrocarbon province located beneath a thick salt layer roughly 2,000 meters below the seabed and 5,000 to 7,000 meters below the ocean surface in the Santos, Campos, and Espirito Santo basins along Brazil's southeast coast. Petrobras announced the Tupi discovery (now Lula) in November 2007 in the Santos Basin, the first major pre-salt find, with regional reserves later estimated at roughly 50 billion barrels of light, sweet crude across the province. Subsequent discoveries at Iara, Buzios, Sapinhoa, Atapu, Sepia, and Mero confirmed the scale. Pre-salt production grew from negligible in 2010 to roughly 2.5 million barrels per day by 2024, accounting for over 75% of Petrobras total production. The Buzios field alone produced over 800,000 barrels per day by 2024, becoming the largest deepwater oil field in the world. Pre-salt fields offer lifting costs of roughly $5 to $7 per barrel, among the lowest in the industry, supporting Petrobras profitability even at depressed oil prices. Development required pioneering deepwater technology including FPSOs (floating production storage and offloading vessels), subsea trees rated for high pressure, and salt-tolerant casing. The pre-salt transformed Petrobras from a regional player into a global producer and underpins its capacity to pay among the highest dividend yields of any major oil company.
Operation Lava Jato (Car Wash) was a Brazilian federal criminal investigation launched in March 2014 by judges including Sergio Moro and Curitiba-based prosecutors. The probe revealed a massive kickback scheme in which Petrobras paid inflated prices for contracts to a cartel of construction companies (Odebrecht, Camargo Correa, Andrade Gutierrez, OAS, Queiroz Galvao, UTC, Mendes Junior, Engevix, Galvao Engenharia), and the contractors funneled roughly 1% to 5% of contract values as bribes to politicians and Petrobras executives. The scheme operated for roughly 15 years through 2014 and involved approximately $5 billion in identified bribes. Former Petrobras downstream director Paulo Roberto Costa, services director Renato Duque, and international director Nestor Cervero pleaded guilty and cooperated. The investigation produced over 300 indictments, convicted former President Luiz Inacio Lula da Silva (later annulled by the Supreme Court in 2021), former House Speaker Eduardo Cunha, and senior executives of all major Brazilian construction firms. Petrobras took roughly $34 billion of writedowns and corruption-related losses between 2014 and 2016, including a $17 billion impairment in 2014 alone. Multiple CEOs resigned including Maria das Gracas Foster in 2015. Petrobras paid a $853 million settlement with US authorities in 2018 for FCPA violations. The scandal contributed to the impeachment of President Dilma Rousseff in 2016 and reshaped Brazilian politics for a decade.
Petrobras emerged from the Lava Jato scandal as the world's most indebted oil company, with gross debt peaking at approximately $126 billion in 2015 (net debt of roughly $100 billion) accumulated from the aggressive pre-salt development program funded substantially through dollar-denominated borrowing. The 2014 oil price collapse from over $100 per barrel to under $50 simultaneously cut cash flow. Investment grade credit ratings were lost in early 2015 with downgrades from Moody's, S&P, and Fitch into junk territory. CEO Pedro Parente, appointed in 2016 by President Michel Temer, launched a recovery program. Petrobras divested roughly $30 billion of assets between 2015 and 2019 including stakes in pipelines (Nova Transportadora do Sudeste sold to Brookfield in 2017 for $5.2 billion, Transportadora Associada de Gas sold to Engie consortium in 2020 for $8.6 billion), the Pasadena refinery in Texas, Bolivia distribution, African upstream interests, and BR Distribuidora (partial IPO 2017). The company also exited unprofitable downstream businesses and shut down loss-making fertilizer plants. By 2019 net debt fell below $80 billion, by 2022 below $50 billion, and by 2024 to roughly $30 billion. Gross debt-to-EBITDA dropped from over 5x in 2015 to roughly 1x by 2024. The recovery, combined with pre-salt cash generation, allowed Petrobras to resume large dividend payouts, returning over $20 billion in 2022 alone and earning the title of the highest dividend yielder among major oil companies.
Petrobras completed a $70 billion share offering in September 2010, the largest equity offering in financial history at that time, raising capital to fund pre-salt development. The transaction included approximately $42.5 billion of new equity sold to public investors and roughly $42 billion in oil rights swapped with the Brazilian Treasury (the cessao onerosa or transfer of rights agreement covering 5 billion barrels of pre-salt reserves). The 2014 to 2018 Lava Jato scandal triggered $34 billion of corruption-related writedowns, six CEO changes, and a 70% stock price decline at the trough. Constitutional Amendment 9 of 1995 had ended the state monopoly but Petrobras remained dominant; subsequent rounds of pre-salt licensing under different governments shifted between production-sharing and concession models. Petrobras listed ADRs on the NYSE in 2000 under ticker PBR. The Lula field commercial declaration in 2010 and Buzios field production start-up in 2018 anchored the pre-salt rollout. President Lula's return in January 2023 marked a strategic pivot back toward state-directed industrial policy. Jean Paul Prates was appointed CEO in January 2023 and fired in May 2024 over disagreements about dividend policy. Magda Chambriard, former director of the National Petroleum Agency, was named CEO in May 2024. The 2023 denial of the Foz do Amazonas drilling license by environmental regulator IBAMA highlighted growing tension between resource development and Amazon protection.