MercoPress. South Atlantic News Agency

Petrobras strike strong support fuelled by resistance to sale of assets and cutting investments

Petrobras said management contingency plans had reduced the cut in output to about 100,000b/d. However unions claim the drop is closer to 500.000bpd.

Brazilian union leaders say stronger than expected support for a strike at Petrobras is due to growing worker opposition to a creeping privatization of the state oil company. The strike, which began on Sunday, has become the biggest stoppage in two decades at Petrobras and shows workers back union efforts to renationalize the company and cut foreign participation in the oil industry, union leaders say.

 The industrial action follows a shift in union tactics to focus on nationalist and anti-capitalist demands rather than wages.

“Frankly we were surprised by the level of support,” said Marcos Breda, communications manager for Sindipetro Norte-Fluminense, a FUP union that represents oil platform workers in the Campos Basin, Brazil's most productive oil region.

“This is very similar to 1995. We're defending the same things, protesting privatization of the company, the need to protect Brazil's sovereignty, the need to maintain investment in Brazil,” he said.

Since Brazil's biggest oil-union federation FUP took to the picket lines on Sunday afternoon, the walkout has cut output by as much as 273,000 barrels a day (b/d). That is as much as 13% of the 2.1 million b/d Petroleo Brasileiro SA, as Petrobras is formally known, was producing before the strike.

On Thursday, Petrobras said management contingency plans had reduced the cut in output to about 100,000b/d from 140,000b/d on Wednesday.

Unions however say Petrobras is under calculating the drop in output since the strike began and put their estimate closer to 500.000bpd.

The cuts, plus delays at fuel terminals, the closing of a fertilizer plant and reported fuel shortages in remote areas of Bahia state have combined to make this the biggest strike against Petrobras since a 32-day walkout in 1995.

According to Breda and his colleagues at FUP, the 1995 strike kept Petrobras out of a privatization drive that sold the country's phone, steel and iron ore companies to private investors. The government later managed to sell most of the stock in the company, but has maintained firm voting control.

Twenty-years later the unions want nothing less than to force Petrobras to tear up its investment plan, which they consider a plot to give away Brazil's energy resources to foreigners at bargain-basement prices. A sharp drop in oil prices in the last year has seen oil-asset prices plunge world-wide.

After years of spending more than $40 billion a year on expansion, Petrobras is now slashing costs, cutting jobs and selling assets in a bid to pay down its $130 billion debt and revive the company.

Market analysts fear strike demands will compromise efforts to restore investors confidence in Petrobras in the wake of a giant price-fixing, bribery and political kickback scandal that hugely inflated costs.