Brazil oil workers reject Petrobras offer, strike possible

RIO DE JANEIRO (Reuters) - Brazil’s largest oil workers’ federation said Thursday its members voted overwhelmingly to reject a contract offer from Petroleo Brasileiro SA, or Petrobras, and were preparing for a possible strike.

The logo of Brazil's state-run Petrobras oil company is seen on a tank in Sao Caetano do Sul, Brazil, September 28, 2016. REUTERS/Paulo Whitaker

Leaders of the FUP union plan to continue talks with Petrobras starting at 2 p.m. (1700 GMT) in Rio de Janeiro and have not yet called on workers to walk off the job.

In recent years, Petrobras has given wage increases well in excess of inflation, and this year’s annual negotiations are shaping up as a test of mettle for new Chief Executive Officer Pedro Parente, who has pledged to cut costs.

Petrobras said in a statement that the union’s decision has had no effect on operations Thursday, though the unions said some workers in Rio de Janeiro-state blocked a heliport used to access Petrobras’ offshore oil fields in the Campos basin.

Petrobras is struggling to maintain minimum investments as it tries to manage $125 billion in debt, the most in the oil industry. Last week the company offered a 4.97 percent increase in salaries, and said it planned to cut overtime payments and regular work shifts.

Inflation in Brazil reached 8.98 percent in the 12 months ending Aug 31. Parente told Reuters last week that the company’s financial situation would not allow Petrobras to give wage increases above inflation.

The rejection of the accord brings Petrobras close to its second major strike in two years, a walkout likely to stir debate on issues such as asset sales and investment cuts that are rarely part of annual labor negotiations.

A walkout would not only disrupt company activity, it also could add to political tensions in Brazil. Petrobras unions backed former President Dilma Rousseff, who was permanently removed from office last month in a polarizing impeachment process.

Rousseff’s allies, including many union leaders, question the legitimacy of her replacement, President Michel Temer, who appointed Parente.

Since his appointment four months ago, Parente has ignored union calls to end the sale of about $35 billion of assets by the end of 2018 and to restore investment that has been cut by about two-thirds in the last three years.

The union has instructed workers to “work to rule”, or meticulously follow the letter of their labor contract and refuse to perform any task not specifically required.

Reporting by Jeb Blount; Editing by Chizu Nomiyama and David Gregorio