Petrobras Strike Cuts Output by 100,000 bpd

Petrobras Strike Cuts Output by 100,000 bpdPetrobras Strike Cuts Output by 100,000 bpd

A five-day strike cut oil production at Brazil's state-run oil company Petroleo Brasileiro SA by 100,000 barrels on Thursday, as contingency plans continued to reduce losses from the stoppage, a company source said.

The source said Petrobras management is not planning to give in to the union demands to stop asset sales and there was no end in sight to the walkout that began on Sunday and threatens to become its most disruptive labor stoppage in 20 years, Reuters reported.

Petrobras said in a securities filing late Wednesday that oil output in Brazil was about 140,000 barrels a day, or 6.5% below pre-strike levels of about 2.1 million barrels a day.

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

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.

Members of Brazil's national oil workers federation said on Wednesday 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.

Strike aims go far beyond a call for an 18% 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.