Petrobras Raises Profit-Sharing Offer to Oil Workers

RIO DE JANEIRO (Dow Jones Newswires), July 30, 2008

Brazilian state-run energy giant Petroleo Brasileiro (PBR) raised its profit-sharing proposal to oil workers, the local Estado news agency reported Wednesday.

Citing sources close to the negotiations, Estado reported Petrobras has raised its offer to about 16% of the value received by Petrobras shareholders in dividends. That was up from Petrobras' previous proposal - made July 9 - which called for oil workers to receive 12.82%.

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

Under Brazilian law, workers can receive a profit-sharing payment of as much as 25% of shareholder dividends. The Brazilian Oil Workers Federation, or FUP, wants Petrobras to pay the full 25% allowed by law.

Petrobras has said its offer was limited by a state-run oversight body, while also citing a decline in 2007 net profits. Petrobras' net profit fell to 21.52 billion Brazilian reals ($13.6 billion) from BRL25.92 billion in 2006.

The 16% profit-sharing plan would be the floor payment for Petrobras workers. According to FUP, 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.

FUP's governing council will meet later Wednesday to discuss the proposal, Estado reported.

Last week, oil workers and Petrobras failed to reach a deal on profit-sharing, with workers voting to reject the company's latest offer and approving the date for a possible nationwide strike Aug. 5.

FUP, which represents Petrobras operational employees, had given the company until last Thursday to make a new profit-sharing proposal or face the possibility of a nationwide strike that would start Aug. 5. Petrobras did not meet the deadline, but negotiations had continued.

FUP had said the union would launch a nationwide strike that would shut down the oil giant's production and refinery operations unless Petrobras raised its current profit-sharing proposal.

Petrobras locally traded shares traded 3.1% higher at BRL35.88 as of 1800 GMT. Petrobras' shares had seen heavy selling in July, falling 22.4% during the month amid a slide in international oil prices and a weeklong strike by oil workers in the key Campos Basin.

So far in 2008, Petrobras shares were down 18.3%.

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