(Bloomberg) -- Even with an escalating graft scandal, Petrobras workers have managed to produce record amounts of oil and gas. Now they face a potential vacuum at the top levels of the state-run company.
With Chief Executive Officer Maria das Gracas Foster and five other executives set to leave Friday, President Dilma Rousseff has little time to find replacements who can help account for bribery losses and regain debt-market access. The managerial turmoil was met with a mixture of surprise, angst and relief by employees who continue the work of supplying oil to Brazilian refineries.
While the so-called Carwash scandal has prompted some spending cuts with funding options limited, Petroleo Brasileiro SA’s oilfields haven’t been affected. The world’s bigges
t producer in waters deeper than 1,000 feet (300 meters) boosted output to a record 2.9 million barrels a day in December. On Wednesday, it announced another Campos Basin discovery.
Still, the chaos surrounding the company has taken its toll, according to workers interviewed Thursday. About 300 protesters chanting and waving anti-corruption banners greeted employees as they returned from lunch in downtown Rio de Janeiro. The atmosphere was more subdued inside the company’s 29-story headquarters, with staffers carrying on with their daily tasks of monitoring production platforms, tracking tankers and updating software amid a mix of curiosity and anxiety, according to staff members and outsourced employees.
“The atmosphere isn’t good,” said Joao Antonio de Moraes, a 30-year company veteran and a union director who was among the largely young protesters. “We feel disenchanted because we’re all called corrupt and it’s not true. Those who produce oil aren’t Graca Foster or the other managers. It’s us, the technicians, and we’re still working hard.”

Lost Prestige

Petrobras is operating normally, the Rio de Janeiro-based company said in an e-mailed response to questions.
Vandre Guimaraes, development secretary of Macae, a town that serves as Petrobras’s base for operations in the Campos Basin oilfields, said he believes there will be little impact over the short run from any management change.
“Whatever affects Petrobras with corruption or management, it’s not going to affect production,” Guimaraes said by telephone. “It could affect future investments, but for now, Petrobras will keep producing.”
While Foster -- the former CEO who was a nuclear and chemical engineer and rose through the ranks -- was respected for her brains and technical prowess, employees also resent the company lost value and prestige under her watch, according to seven staff members and outsourced employees, who asked not to be named because they aren’t authorized to speak to the media.

Value Destruction

Foster quit after the company lost $100 billion in market capitalization since September as she grappled to gauge the graft losses at a time of slumping crude prices that spurred cutbacks at new projects and contracts.
By delaying the release of earnings and cutting off access to debt markets, the probe now jeopardizes investments needed to keep production growing. Petrobras is banning suppliers implicated in the case from bidding for new contracts.
At least 4.1 billion reais ($1.5 billion) in graft losses - - as part of a total potential writedown of 89 billion reais -- has have been identified by Petrobras in a scheme in which company executives allegedly took bribes from a cartel of construction companies and shared the proceeds with politicians.
Employees have learned of management changes and corruption allegations through the media at the same time as family and friends, the employees said. Most have been monitoring the Internet and television for clues as to what leadership will look like next week. The company’s board is scheduled to pick a new CEO on Friday.

Brazil Transfixed

One employee shook his head when asked about what the company was doing to update staff on developments. The worker, who is in the Information Technology department, said there were no updates from the company concerning their leadership except for a brief statement Wednesday acknowledging that top-tier management had left.
The scandal engulfing Petrobras, a decade-old story of alleged kickbacks, bribes and inflated construction contracts, has transfixed Brazil and left Rousseff struggling to contain the damage.
Since taking charge in 2012, Foster has gone from one of the country’s most-respected managers to a target for protesters and jokesters. People rallied in front of her residence in Copacabana Tuesday evening to demand she step down. Masks of her face are on sale in Rio ahead of Carnival.
A new management team could help the company regain the confidence of independent auditors and allow it to report the financial results needed to regain capital-market access.
“The instability of a management team weakened by scandal isn’t good for the company,” Guimaraes said. “Petrobras has responsibility to shareholders to keep production going.”
To contact the reporters on this story: Sabrina Valle in Rio de Janeiro at svalle@bloomberg.net; Tariq Panja in Rio de Janeiro at tpanja@bloomberg.net; Anna Edgerton in Brasilia at aedgerton@bloomberg.net