(Bloomberg) — Brazil’s President Luiz Inacio Lula da Silva fired Jean Paul Prates, the chief executive of the country’s state-owned oil company, Petroleo Brasileiro SA, following a dispute over dividend payments.

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The firing was confirmed by people familiar with the matter, who asked not to be identified discussing private matters. Petrobras, as the company is also known, said late Tuesday in a statement that Prates is expected to officially resign at an upcoming board meeting.

Lula plans to nominate Magda Chambriard, the former head of Brazil’s oil and gas regulator, to replace Prates, according to a person familiar with the matter. Petrobras’s American depositary receipts dropped more than 6% after the close of regular trading in New York.

The announcement brings to an end months of speculation that his days at the helm of Petrobras were numbered as he tried balance competing expectations from investors and Lula.

Tensions escalated earlier this year when Prates refused to align himself with government-appointed board members who voted to withhold the payout of extraordinary dividends to shareholders who’d grown use to steady returns.

The firing may add to concern among investors that Rio de Janeiro-based Petrobras is coming under increasing pressure from the ruling Workers’ Party to help revive Brazilian industry and create jobs at the expense of shareholders. The dividend drama shocked some investors who viewed it as a sign of growing political interference in Latin America’s biggest oil producing country.

After weeks of debate, Petrobras ultimately approved returning half its available cash to investors through a special dividend, as Prates’s executive board had initially proposed. The government is the biggest shareholder, and the dividends have helped shore up a fiscal deficit at a time spending is on the rise.

A former senator for Lula’s left-wing party with a history of working in the oil industry, Prates became chief executive in January 2023, shortly after Lula assumed the presidency. Prior to his appointment, Petrobras had gone through six CEOs, including interim ones, since 2019.

Under Prates’ leadership, Petrobras changed direction, halting asset sales, shielding consumers from sharp fluctuations in international oil prices and earmarking billions of dollars for energy transition investments. The company recently boosted the budget for its five-year business plan to $102 billion, its biggest spending plan since 2015.

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