November 5, 2015 / 12:17 AM / 4 years ago

Worst Petrobras strike in 20 years hurts Brazil oil output

RIO DE JANEIRO (Reuters) - A four-day strike at Petrobras gathered steam on Wednesday, cutting crude and natural gas output from the No. 2 South American oil producer and threatening to become the most disruptive walkout at the state-run oil company in 20 years.

The Petrobras logo is reflected in the window of the company's headquarters in Sao Paulo April 23, 2015. REUTERS/Paulo Whitaker

On Wednesday, Petroleo Brasileiro SA, as Petrobras is formally known, said in a securities filing late Wednesday that oil output in Brazil was about 140,000 barrels a day, or 6.5 percent below pre-strike levels of about 2.1 million barrels a day.

Using contingency plans management restored production that was cut by as much as 273,000 barrels a day, or 13 percent below pre-strike levels on Monday, and by 178,000 barrels a day on Tuesday, or 8.5 percent below levels before the strike began Sunday, Petrobras said.

The strike is having a “significant” financial impact on Petrobras a company source told Reuters late Wednesday adding that output cuts had not changed significantly from Tuesday.

The cuts have already caused the biggest strike-induced hit to Petrobras’ crude output since a 32-day strike in 1995 that led to lines at gas stations and military occupation of refineries. The latest strike is also likely to increase pressure on a company hobbled by a corruption scandal and struggling under $130 billion of debt, the largest in the world oil industry.

“This is serious because it is happening in the midst of Brazil’s worst economic crisis in decades and in the middle of Petrobras’ worst crisis ever,” said Adriano Pires, head of the Brazilian Infrastructure Institute, a Rio de Janeiro energy research company.

“It’s like the unions are saying, ‘Hey, Petrobras is in intensive care. Let’s pull the plug!’” Pires said.

Members of Brazil’s national oilworkers federation said on Wednesday that Petrobras was underestimating output losses. In a statement late Wednesday, Brazil’s biggest oil union federation said production cuts are as much as a quarter of Petrobras Brazilian output, or just over 500,000 barrels a day.

The union, though, did admit that it has not cut output as much as hoped. Production from the giant Roncador offshore oil field in Brazil’s Campos Basin continued on Wednesday even after production-vessel workers joined the strike, a union spokesman said, denying media reports of an output shutdown.

Petrobras management has said in the past that it can maintain operations with no impact to fuel supplies in Brazil for a week or 10 days at the most. It said Wednesday it bought 82,000 cubic meters (515,764 barrels) of gasoline from Brazilian petrochemical company Braskem, bolstering supplies in November.

Strike aims go far beyond a call for an 18 percent salary increase. They also seek to block planned asset sales, reverse budget cuts and protect Petrobras’ right to lead the bulk of new offshore oil development.

Petrobras has offered an 8.1 percent salary increase, but wages are not the key issue, union representatives say.

“This movement is a clear and open criticism of the government’s economic policies,” said Deyvid Bacelar, a union activist and worker representative on Petrobras’ board of directors.

Those goals, some of which can only be guaranteed by Brazil’s Congress, will be hard for Petrobras to meet.

Without $50 billion of planned assets sales and cuts to a five-year investment plan that was recently the world’s largest, Petrobras risks being unable pay its massive debts, Chief Executive Officer Aldemir Bendine told Congress last month.

If prolonged, the strike will worsen the company’s struggles to raise output and reduce debt, the Standard & Poor’s debt-rating agency said on Wednesday.

The government has little money or credit to help Petrobras as it grapples with a gaping fiscal deficit.

Reporting by Jeb Blount; Additional reporting by Marta Nogueira; Editing by Grant McCool and Lisa Shumaker

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below