Petrobras Seeks Further Talks Ahead of Union Meeting

RIO DE JANEIRO (Dow Jones Newswires), July 25, 2008

Brazilian state-run energy giant Petroleo Brasileiro (PBR) failed to reach a profit-sharing deal with oil workers, but the company asked the union to continue talks Friday, the Brazilian Oil Workers Federation said.

FUP, as the umbrella union representing Petrobras' operational employees is also known, said talks lasted until 0100 GMT Friday. The union did not say whether negotiations would continue Friday during the day, when FUP's governing council was expected to meet and begin organizing plans for a possible nationwide strike.

FUP had given Petrobras until Thursday to make a new profit-sharing proposal or face the possibility of a nationwide strike that would start Aug. 5. According to the union, Petrobras did not make a new proposal Thursday.

Unless Petrobras raises its current profit-sharing proposal, FUP said the union would launch a nationwide strike that would shut down the oil giant's production and refinery operations, as well as other units.

The majority of unions affiliated with FUP have held assemblies around Brazil to vote on Petrobras' latest profit-sharing proposal, with oil workers rejecting the offer and approving FUP's strike date. The assemblies will continue through Saturday.

Petrobras' latest profit-sharing proposal, which was made July 9, calls for oil workers to receive 12.82% of the value received by Petrobras shareholders in dividends, an FUP spokeswoman told Dow Jones Newswires. Under Brazilian law, workers can receive a profit-sharing payment of as much as 25% of shareholder dividends.

In 2006, oil workers received 12.57% of shareholder dividends compared with 12.05% in 2005. Current negotiations are for 2007 profit-sharing payments.

FUP wants Petrobras to pay the full 25% allowed by law, while Petrobras said its current offer is at the limit set by a state-run oversight body. Petrobras has also cited a decline in 2007 net profits, which fell to 21.52 billion Brazilian reals ($13.6 billion) from BRL25.92 billion in 2006.

The current profit-sharing offer represents a decrease of BRL4,000, or about 30%, from last year's floor payment, according to FUP. The union declined to give exact values for profit-sharing payments, but the union spokeswoman said that about 40% of Petrobras workers receive the floor profit-sharing payment.

Profit-sharing payments are made on a sliding scale based on Petrobras' salary table, the union said. The union is also pushing Petrobras to end the sliding scale, with all employees receiving equal profit-sharing payments.

Platform workers in the key Campos Basin walked off the job July 14 for five days, and FUP organized a 48-hour work slowdown at Petrobras facilities as a show of support for platform workers and to pressure Petrobras on profit-sharing.

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


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