Brazil Oil Workers To Vote On Offer; Strike Enters Last Day

RIO DE JANEIRO (Dow Jones Newswires), July 18, 2008

Striking oil workers will end their strike against Brazilian state-run energy giant Petroleo Brasileiro (PBR), or Petrobras, on Friday, regardless of the outcome of a vote on the company's latest offer, a union spokesman said.

A spokesman for the Sindipetro-NF union, which represents striking Campos Basin platform workers, said union officials will suggest workers reject Petrobras' latest proposal in a vote scheduled for 2000 GMT Friday. The union said the proposal did little to resolve differences over how Petrobras accounts for "disembark day," or the day platform workers disembark for shore leave.

Workers were still scheduled to end the strike at 0300 GMT Saturday, the spokesman said. Platform workers started the five-day strike on Monday. It was the first major walkout at Petrobras since 2001.

A 48-hour slowdown organized by the Brazilian Oil Workers Federation, or FUP, also was scheduled to end at 0300 GMT. FUP, an umbrella union representing Petrobras' operational employees, called for the slowdown to protest Petrobras' latest profit-sharing offer and to support platform workers.

While the current labor unrest was expected to end Friday, further disruptions loom. FUP has threatened a nationwide strike that would shut down Petrobras facilities around the country, including production units, as early as August 5.

FUP will hold assemblies with Petrobras workers July 19-23 to present Petrobras' latest proposal, which was submitted to the union 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.

This week's labor actions appeared to have had little impact on Petrobras' operations so far. Oil production at rigs in the Campos Basin returned to normal less than 24 hours after the strike started, easing concerns that the walkout could affect tight global oil supplies.

The key Campos Basin, located off the coast of Rio de Janeiro state, produces more than 80% of Brazilian crude.

Furthermore, local press reports said that Petrobras typically maintains a 30-day supply of petroleum derivatives and an additional 15-day reserve of crude oil to maintain operations in case production is disrupted.
Natural gas supplies, however, could come under pressure because the company doesn't keep stocks of the fuel.

Sindipetro-NF and FUP both said that the strike and slowdown have affected natural gas production and processing. The union said gas flows from production rigs in the Campos Basin was down 50%. In addition, a gas terminal in Macae in Rio de Janeiro state was shut down, while the flow of natural gas to a petrochemical unit in Duque de Caxias also had been interrupted, the unions said.

Petrobras said in a statement Friday that all of its units were operating normally.

In early trade Friday, Petrobras shares rebounded amid a volatile session to rise 1.9% at 38.52 reals ($24.17) as of 1445 GMT. The company's shares are down 16.6% in July, and off 12.4% so far in 2008.

International oil prices also recovered from three-consecutive days of declines, rising 0.7% to $130.16 a barrel in electronic trade on the New York Mercantile Exchange. The increase was attributed to a renewed focus on supply concerns, which had fallen by the wayside amid expectations for faltering global demand.  

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