Eurasia Group speculated that an overhaul in the leadership of Petrobas will come a bit earlier than anticipated

Petroleo Brasileiro Petrobras surged on speculations that the Brazilian state-run oil company will soon replace its CEO and shakeup its board amid corruption investigations.

The stock price of Petrobras climbed more than 13% to $7.26 per share around 3:22 in the afternoon in New York.

Petrobras

Brazil denied reports about replacing Petrobas CEO

The government of Brazil denied reports that President Dilma Rousseff advanced the schedule to replacing Petrobras CEO Maria das Gracas Foster, and to change the composition of the company’s board.

Eurasia Group wrote about the potential leadership shakeup at Petrobras in a note to investors today.  The firm’s analysts, Christopher Garman, Joao Augusto de Castro Neves and Cameron Combs speculated that “an overhaul of the company may be coming a bit earlier” than they anticipated.

According to the analysts, a leadership change at Petrobras would accelerate favorable overtures in energy policy including the lifting of the requirement for the company to be the lead operator in pre-salt (deep-water, offshore) activity with a minimum stake of 30%.

In addition, the analysts also suggested that the government of Brazil is unlikely to reduce gasoline prices for the time being, and the graft investigation will possibly affect Petrobras until 2016.

Petrobras executives accused of failed fiduciary duties

Brazil’s securities regulator, the Comissão de Valores Mobiliários (CVM) is investigating Petrobras on allegations of failed fiduciary duties by its executives.  T

The prosecutors in the country alleged that Petrobras executives conspired with construction companies and government officials in a contract-kick-back scheme for years.he corruption scandal caused huge losses to investors.

In 2009, CVM first discovered signs of corruption within Petrobras. At the time, Pres. Rousseff stated that the company “has the most accurate accounting standards in the world.”

Rousseff was then serving as chairman of the company. There is a possibility that the regulator will also investigate if the president was involved in the scheme.

Rousseff previously stated that she has no knowledge about the corruption at Petrobras and promised to investigate it.