Brazil Oil Workers Strike, Output Losses Said Limited

Oil workers in Brazil started a 5-day strike on Monday but state-run energy company Petrobras said it had already reversed most of the production losses on its platforms.

Petrobras said output at the platforms, which produce most of the country's oil and gas, was down 63,000 barrels a day. This revised two earlier estimates of output shortfalls of 300,000 bpd and 163,000 bpd, respectively.

Oil Pump
Oil Pump

"Production at the Campos Basin is practically back to normal. The contingency plan has been implemented successfully," Petrobras said in a statement.

At 6 PM local time (9 GMT), the company was producing at 96 percent of its capacity, the statement said. Earlier Supply Director Paulo Roberto Costa said that output could recover fully by the end of the day.

Petrobras has dispatched emergency production teams to the platforms to keep production running with a skeleton staff.

Oil workers in the Campos Basin, which accounts for 80 percent of Brazil's total crude output of 1.8 million bpd, are demanding that the company recognize the day employees leave a platform for shore as a paid work day.

Jose Maria Rangel, coordinator of the Norte Fluminense Oil Workers Union, estimated earlier in the day that the strike had reduced Petrobras's output by 400,000 bpd.

Later, union leaders were not available to comment on Petrobras's latest output figures.

A national umbrella union will meet on Tuesday to discuss a possible wider strike over profit sharing demands.

Traders concerns last week over the strike helped push world oil prices to a new record on Friday above $147 a barrel, even though the strike was unlikely to reduce international oil trade.

Brazil's total crude output is only around 2 percent of world supply and most is consumed domestically.

Light crude on the New York futures exchange was slightly in the Asian session Tuesday at around $144.80 a barrel as a U.S. plan to restore confidence in its financial sector outweighed worries about global threats to production.

Brazil's oil sector was opened to competition in 1997, but Petrobras still accounts for the vast majority of national production.

A five-day nationwide strike of Petrobras workers in 2001 seriously reduced output and forced Brazil to import additional oil. Unions and the company have resolved their differences over the past few years without stoppages hurting production.

Petrobras shares closed up 0.69 percent at 40.88 reais in intraday trade. The company has been plagued by production setbacks due to delivery delays and maintenance on many of its offshore platforms.

"The production curve of the company is already not growing so well. With the strike, it could worsen, and it will depend on the duration of the strike," said Nelson Rodrigues de Matos, an analyst at Banco do Brasil Investimentos.