Petrobras Oil Worker Slowdown Could Be Extended to Next Week

RIO DE JANEIRO (Dow Jones Newswires), July 17, 2008

Brazilian state-run energy giant Petroleo Brasileiro (PBR), or Petrobras, and oil workers continued their standoff Thursday, with striking platform workers joined by fellow union members in a nationwide slowdown.

Thursday marked the start of a 48-hour slowdown at refineries, distribution terminals and other Petrobras units sponsored by the Brazilian Oil Workers Federation, or FUP. FUP is an umbrella union representing Petrobras operational employees.

According to FUP, the slowdown will seek to disrupt shift changes and other operations, but will not attempt to stop production. Petrobras said a contingency plan was in place to ensure control and operations at its units, as well as maintain market supplies.

Talks late Wednesday between Petrobras and the Sindipetro-NF union, which represents striking Campos Basin platform workers, failed to end the strike. Petrobras submitted a proposal, which will be presented to union members for a vote Friday, a union spokeswoman said.

In a statement, Sindipetro-NF said that the proposal did little to resolve differences over how Petrobras accounts for "disembark day," or the day platform workers disembark for shore leave. Union officials will meet later Thursday to discuss the strike and "define indications and new paths."

The strike was still expected to end Friday, but union officials have indicated that it could be extended. Platform workers in the key Campos Basin started the five-day walkout on Monday, the first major strike at Petrobras since 2001.

Meanwhile, FUP joined the dispute not only to show support for the platform workers, but also to ramp up pressure on Petrobras to increase the company's profit-sharing proposal. FUP also threatened a nationwide strike that would shut down Petrobras facilities around the country, including production units, as early as Aug. 5.

FUP will hold assemblies with Petrobras workers July 19-23 to present Petrobras' latest proposal, which was submitted to the union on July 9. The union is urging members to reject the offer.

In addition, FUP has requested that Petrobras submit a new proposal by July 24. FUP's governing council will meet July 25 to discuss the possibility of the nationwide walkout should negotiations not advance further, the union said.

Petrobras locally trade shares tumbled in early trade Thursday, sliding 1.6% to 39.14 Brazilian reals ($24.63). The decrease was primarily related to declining international oil prices, which continued slipping. At about 1340 GMT, light sweet crude for August delivery was down 25 cents to $134.35 a barrel in trading on the New York Mercantile Exchange.

Oil prices have registered steep declines in recent sessions as expectations for faltering demand offset supply concerns.

Copyright (c) 2008 Dow Jones & Company, Inc.


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