Union says it warned Petrobras about refinery months before fire

Mon Jan 6, 2014 2:34pm EST

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By Jeb Blount

RIO DE JANEIRO, Jan 6 (Reuters) - Workers at a Petrobras refinery near Rio de Janeiro warned the state-owned oil company in October that a key unit, now shut after a Saturday fire, was "dangerously" above capacity, union officials told Reuters.

Since August, Petrobras has been using the coking unit at its REDUC Refinery in suburban Rio to process about 6,000 cubic meters (37,740 barrels) a day of thick, vacuum-unit residue - 20 percent more than its design capacity of 5,000 cubic meters (31,450 barrels) a day, the union said.

"Petrobras is operating at the limits, and we've warned them repeatedly that there was an imminent danger of an accident," said Simao Zanardi, president of the union known as Sindipetro Duque de Caxias. "This has been a very bad end of the year for our members at REDUC and other Petrobras refineries."

Petrobras officials did not respond to telephone and e-mail requests for comment on the union's safety and operations criticisms on Sunday or Monday, nor on how output at REDUC has been affected by a fire on Saturday, the latest in a string of accidents at REDUC and other refineries.

The REDUC refinery's coking unit processes the residue into diesel, gasoline and cooking gas. Other refining units at REDUC also produce those products, the union said.

According to documents sent to government ministries and labor-law prosecutors, dated Oct. 2, the strain on capacity put the 242,000-barrel-a-day refinery in "grave and imminent risk ... of an industrial disaster." The union provided copies of the documents to Reuters on Monday.

The strain, according to union officials, is the result of Petrobras running its 13 Brazilian refineries at 95 percent of capacity or more. The company is pushing its refineries to the limit, they argue, because Petrobras can't keep up with domestic fuel demand, forcing it to import.

The urgency has been heightened by government pricing policies that force Petrobras to sell imported fuel at a loss.

Those policies have resulted in more than 30 billion reais ($12.7 billion) of refining-and-supply-unit losses at Petrobras in the last two years. U.S. refineries operate at about 87 percent capacity according to the U.S. Energy Information Administration.

The union also blames a lack of appropriate maintenance for the Saturday blaze, which forced the processing unit that caught fire to be shut down.

The incident follows a November fire that put Petrobras' 200,000-barrel-a-day REPAR Refinery near Curitiba, Brazil out of service for nearly a month and forced the company to hire a fleet of tankers to import emergency fuel supplies from as far away as India.

On Nov 24, a worker was injured at REDUC's lubricants unit when a compressor blew apart and another compressor exploded seven days later, but with no injuries, Zanardi said. The refinery also suffered a fire in its lab in December, he added.

In December, Brazil's petroleum regulator ANP confirmed a 151,500-real fine on Petrobras for operating its 365,000-barrel-a-day REPLAN Refinery in Sao Paulo state at above its licensed capacity.

The Saturday fire knocked out six pumps leading REDUC's coking unit, said Zanardi, who toured the damaged unit on Sunday. As the unit is near the end of the refining train, its outage does not halt all output at the plant, but its loss has caused the refinery to lose "a significant amount" of diesel output, Zanardi said.

Zanardi said "an army of workers" is working around the clock to fix the pumps and that Petrobras hopes to have the coking unit running again within a week.

The ANP said the refinery will start operating normally on Wednesday.

The coking unit is important for the refinery's efficiency and profitability. It squeezes higher-value gasoline, diesel and cooking gas from a residue that once was used to make lower-value asphalt. When coking is complete, the leftover petroleum coke is used to fuel electrical power stations or provide heat for industrial processes, like cement making and steelmaking.

Petrobras' only comment about the fire so far was a Saturday statement disclosing the incident, saying the fire was controlled without injury and that the coking unit itself was not damaged.

($1 = 2.37 Brazilian reais) (Reporting by Jeb Blount; Editing by Nick Zieminski)

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