(Bloomberg) -- The new chief executive officer of Petrobras is an oil-industry veteran with tight ties to Brazilian President Luiz Inacio Lula da Silva and a history of pushing for the types of massive investment projects that spook shareholders worried about overspending.

Magda Chambriard, tapped by the government to replace outgoing CEO Jean Paul Prates at the state-controlled firm, led the country’s oil regulator in the 2010s when it licensed vast exploration areas on land and offshore. She’s closely aligned with the ruling Workers’ Party and has been a vocal supporter of refinery expansions, a top priority for Lula as he seeks to use the company to stoke economic growth.

Investors showed their disdain for the appointment, sending shares of the company formally known as Petroleo Brasileiro SA down as much as 8.3% in Sao Paulo, the biggest intraday decline in two months.

“Her appointment is a sign of intervention,” said Adriano Pires, a director at the Brazilian Center for Infrastructure, a consultancy. “The new CEO has the profile of attending to what the government wants.” Pires was briefly in the running to be the CEO under the previous government led by Jair Bolsonaro.  

Petrobras, Latin America’s largest oil producer, has long been a political tool for Brazilian presidents who’ve tried to make the company a vehicle for their economic vision — whether that means heavy state intervention or a hands-off approach. Lula, who returned to the presidency last year, has been at odds with Prates and his push for extraordinary dividends to return cash to shareholders, instead of using the money to make investments.

Electric Chair

The top job at Petrobras has earned the sardonic nickname of “the electric chair,” because of the parade of CEOs in recent years who have run afoul of the government. Chambriard faces pressure to have Petrobras help revive the domestic naval and manufacturing industries, while stricter governance rules are likely to complicate these initiatives. 

When Prates took the job, he was expected to take direction from the government as a member of the ruling Workers’ Party. Before long, found himself defending shareholder interests. 

“The same thing will probably happen with Madga eventually,” said Andre Fagundes, who covers Brazil for energy consultancy Welligence and previously worked with Chambriard at the ANP. “She will definitely follow the government up until a point when it no longer makes sense.”

Chambriard’s appointment is a boon for the country’s powerful oil unions, which opposed the company’s decision to cut investments sharply before Lula took office. Deyvid Bacelar, the head of the FUP union, said his organization shares the new CEO’s goals of reviving Brazil’s offshore industry and building new refineries.

Chambriard met Wednesday morning with Mines and Energy Minister Alexandre Silveira to discuss her new role, according to people familiar with the meeting. The topics they discussed included exploration in Brazil’s equatorial waters, the natural gas market, refineries and fertilizers, according to the people.

Lula’s chief of staff, Rui Costa, and his executive secretary Miriam Belchoir endorsed Chambriard for the job, people familiar with the appointment said, in a signal that she could have a better relationship with key members of Lula’s cabinet than Prates did.

Petrobras’s executive director of corporate affairs, Clarice Coppetti, will serve as temporary untill Chambriard is officially confirmed.

Chambriard, an engineer by training, began working at Petrobras in the 1980s and joined the Brazilian National Agency for Petroleum, Natural Gas and Biofuels in the 2000s, then became the head of the agency in 2012. One of the first things she did as general director was auction off deep-water acreage in the region known as the Equatorial Margin. The oil industry has been battling with environmental authorities ever since to get exploration permits. 

Chambriard has criticized delays for the government to issue licenses to drill at an environmentally sensitive site on the equatorial margin off the coast of Brazil, saying that they are leaving the nation without a source of growth after its top-oil producing basin, the pre-salt, declines.  

“It’s time to look for new frontiers so Brazil can keep producing oil,” she told Bloomberg in an interview in December.

--With assistance from Simone Iglesias and Leda Alvim.

(Updates to include additional comments on Magda Chambriard throughout)

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