Brazilian Oil Worker's Strike On Hold

Oil workers at Petrobras will probably suspend a three-day strike due to start on Wednesday, union leaders said. The workers are looking for a mediator, probably from the Labor Ministry, to negotiate with the company. Last month, Oil Workers' Federation (FUP) umbrella union for the industry called the strike to demand a bigger share of company profits. Petrobras is Brazil's only oil producer and several days of strikes could further restrain the country's bid to break out from over a year of languid economic growth.

"Now FUP recommended to the unions that the strike be suspended as there is another chance to resolve the situation by law with the help of a mediator," said FUP director Antonio Carrara. "Normally, unions follow our recommendations, so the strike is unlikely to start tomorrow." He said FUP expected to find a mediator - probably representatives of the Labor Ministry, restart talks with Petrobras and receive the final answer on profit-sharing still this week. "This is the last instrument we have. If it doesn't work, then we'll set a new date for the strike," Carrara said.

At the start of May, Petrobras oil workers staged a one-day warning stoppage. The previous nationwide strike in October 2001 lasted five days and battered the economy, forcing Brazil to import more oil and reducing the country's trade surplus.

Petrobras workers contend that their share of profits from Petrobras is too low, especially since the company has posted higher earnings in each of the past few years and raised pay for managers and directors. The workers demand 380 million reais ($150 million), or 11 percent of this year's 3.5 billion reais dividend program, which they say should be distributed evenly among all workers without preferences for managers. Petrobras says that the actual sums paid to workers have increased. It agrees to an increase in base salary and to distribute around 7 percent of dividends to workers. Company officials have kept quiet about the potential strike and ways to resolve the situation.

Petrobras posted a record profit of over 10 billion reais ($4 billion) last year, but it reported a nearly 60 percent slump in first-quarter profits from year-ago levels due to a fall in world oil and fuel prices. Petrobras produces approximately 1.5 million barrels of oil per day, but still has to import around 400,000 bpd to meet its oil needs. A range of foreign and local oil firms are drilling for oil in Brazil, but the state company remains the sole producer and accounts for nearly all refining.