# The Complete History of Petrobras (PBR): From "The Oil Is Ours" to the Pre-Salt Giant and the Biggest Scandal in Brazil
Few companies are as tangled up with the identity of a nation as Petrobras is with Brazil. It was born from a patriotic rallying cry, grew into a global oil giant on the back of a spectacular discovery deep beneath the ocean, then became the epicenter of the biggest corruption scandal in the country's history, and somehow emerged as one of the highest dividend payers in the world. This is the complete story of Petrobras (PBR).
Act I: "The Oil Is Ours" (1953)
The story begins with a slogan that still echoes in Brazil: "O petróleo é nosso", "The oil is ours." In the early 1950s, Brazil was tired of foreign companies controlling its energy. President Getúlio Vargas turned that nationalist sentiment into policy, and on October 3, 1953, he created Petróleo Brasileiro S.A., Petrobras, granting it a state monopoly over the exploration, refining and transport of oil.
Petrobras was not just a company; it was a symbol of national sovereignty and self-determination. That DNA, part business, part instrument of the state, would shape everything that followed, for better and for worse.
Act II: The Monopoly Era and Opening Up (1953-1997)
For decades, Petrobras held a complete monopoly on Brazilian oil, building refineries, pipelines and expertise, and becoming one of the most important institutions in the country. It developed genuine world-class capability, especially in the difficult art of deepwater drilling, a skill that would soon pay off enormously.
The monopoly finally ended in 1997, when President Fernando Henrique Cardoso's reforms opened the sector to competition and, crucially, pushed Petrobras onto international markets. Its shares began trading abroad, including as an ADR on the New York Stock Exchange under the ticker PBR, letting global investors own a piece of Brazil's oil champion.
Act III: The Pre-Salt Bonanza (2006-2010s)
Then came the discovery that changed everything. In 2006, Petrobras struck oil in the Lula field of the Santos Basin, and it was no ordinary find. The oil lay beneath a thick layer of salt, thousands of meters under the ocean floor, a formation known as the "pré-sal" (pre-salt).
It was one of the largest oil discoveries of the century. Suddenly Brazil was sitting on billions of barrels of reserves, and Petrobras, with its deepwater expertise, was the company to unlock them. First oil from the pre-salt flowed in 2008, and a series of further discoveries followed. Petrobras's value soared, and Brazil dreamed of joining the ranks of the world's great oil powers. For a while, PBR was one of the most valuable companies on Earth.
Act IV: Lava Jato, the Fall (2014)
Pride came before a spectacular fall. In March 2014, investigators launched Operation Lava Jato (Car Wash), and what they uncovered became the largest corruption scandal in Brazilian history.
The scheme was staggering: major construction companies formed a cartel, overcharged Petrobras for contracts, and funneled the excess, an estimated nearly $3 billion in bribes, back to Petrobras executives and politicians, especially figures tied to the ruling Workers' Party. Dozens of powerful businesspeople and politicians were indicted. The scandal reached the highest levels of Brazilian power, contributed to the impeachment of President Dilma Rousseff, and helped reshape the country's politics for a decade.
For Petrobras, it was devastating. The company had to write down billions, its stock collapsed, and its reputation was shattered. It was a brutal lesson in what happens when a company is treated as a political piggy bank.
Act V: The Comeback and the Dividend Machine (2016-2026)
Remarkably, Petrobras survived and rebuilt. It cleaned up governance, sold off non-core assets, cut debt, recovered hundreds of millions lost to graft, and refocused on its crown jewel: the highly profitable pre-salt fields.
The turnaround produced a surprising new identity, Petrobras as a dividend powerhouse. Flush with cash from pre-salt oil, the company began paying enormous dividends, at times making PBR one of the highest-yielding large stocks in the entire market. Today it trades around $20 a share as Petrobras (PBR), with a dividend yield often in the mid-single digits or higher, a magnet for income investors willing to take on the risk.
The Ever-Present Political Risk
Here is the catch that never goes away: the Brazilian government remains Petrobras's controlling shareholder. That means politics is always part of the investment. Governments have repeatedly pressured the company over fuel prices (keeping them low to fight inflation, which hurts profits and dividends) and investment strategy. Every election can move PBR, because a new administration can change how the company is run, a dynamic we explore in the Petrobras election trade.
The Bottom Line: A National Champion With a Split Personality
Petrobras is two things at once: a genuinely world-class oil company sitting on some of the planet's most valuable reserves, and a state-controlled entity subject to the whims of politics and vulnerable to corruption. That duality is the whole story, from "the oil is ours" to the pre-salt boom to Lava Jato and back.
Our take: High reward, high risk, and politics is the wildcard. Petrobras offers cheap valuation, world-class assets and eye-catching dividends, which is why income and value investors are drawn to PBR. But it comes wrapped in political risk that pure private oil companies do not carry: government control over pricing and strategy can change the story overnight, and the Lava Jato scandal is a permanent reminder of what can go wrong. For those who understand and accept that risk, it is a fascinating asset; for those who do not, the dividend can be a trap. If you want Brazil exposure, know exactly what you are buying, as we cover in how to invest in Brazil. Key risk to watch: government intervention in fuel pricing or strategy, especially around elections, which can slash dividends and profits regardless of how much oil the company pumps.---
This article is for informational purposes only and is not financial advice. Always do your own research before investing.
