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Brazil's Petrobras set to pick new CEO amid corruption scandal

[RIO DE JANEIRO] Brazil's Petrobras may pick a new chief executive and other top management on Friday as the embattled state-run oil company tries to regroup following the sudden resignation of nearly all of its senior managers earlier this week.

Chief Executive Officer Maria das Graças Foster and five key lieutenants quit on Wednesday amid a huge and still expanding corruption probe that has helped send the company's shares tumbling about 60 percent since September and caused a major political crisis for President Dilma Rousseff.

Petroleo Brasileiro SA, as the Rio de Janeiro-based company is formally known, said in a statement on Wednesday that its board would choose new leadership on Friday.

Given the company's difficulties, and the absence of a clear successor, some investors question whether the decision might be delayed into this weekend or longer. Any announcement on Friday would likely come after local markets close.

Indeed, the new CEO faces a daunting task. He or she must restore confidence in a company undermined by price-fixing, bribery and political-kickback allegations and renew access to capital markets cut off by the scandal.

The government, Petrobras' principal shareholder, will also push to maintain more than US$200 billion of investment over five years to bolster a sluggish economy.

The scandal has also hammered suppliers. Allegedly involved in the corruption, Petrobras has stopped paying them. Thousands have been fired. New oil output, and royalties Rousseff promised from giant offshore fields, will be delayed as a result.

Meanwhile, oil prices are near six-year lows, reducing cash needed to pay US$120.3 billion in debt, the largest of any major oil company.

Speculation about Mr Foster's replacement has been rampant since November when more than three-dozen people, including former Petrobras executives, were caught in the scandal.

Names under consideration include former central bank governor Henrique Meirelles; the former chief executive of iron-ore miner Vale, Roger Agnelli; current Vale CEO Murilo Ferreira, former Petrobras and OGX executive Rodolfo Landim, and the former CEO of petrochemical company Braskem , José Carlos Grubisich.

Current Petrobras employees are expected to fill the other posts.

The new team's first job will be to tally corruption-related losses and publish audited fourth-quarter results by the end of April as required by Brazilian law and bond contracts with international investors.