Dissident unions maintain Brazil strike: Update

OREANDA-NEWS. November 18, 2015. Several key unions in Brazil are maintaining an oil strike in defiance of a wage-hike deal struck last week between the labor federation (FUP) and state-controlled Petrobras.

On 13 November, the FUP suspended the strike, the largest to hit Brazil?s oil industry in two decades. The agreement included a 9.53pc wage increase and provided for the creation of a joint committee to analyze proposed changes to Petrobras' 2015-19 business plan.

Most of the 14 regional unions the FUP represents approved Petrobras' proposal over the weekend and returned to work today. But some key unions have rejected the proposal and decided to stay off the job.

On 14 November, the Sindipetro-NF union, which is responsible for most of the offshore platforms in the Campos basin, voted overwhelmingly to continue the strike. The 61,300 b/d P-43 platform joined the strike yesterday, bringing the total number of Campos basin platforms now participating to 51.

Workers of the Sindipetro-ES union of Espirito Santo state, responsible for around 386,000 b/d of onshore and offshore production, also voted to continue the strike. Workers in the northern state of Ceara, accounting for 6,000 b/d, remain on strike as well.

Last week, the FUP said lost production from the Campos basin was averaging around 200,000 b/d. Petrobras said contingency teams at striking platforms had helped limit the impact to around 115,000 b/d. The workers first walked off the job on 1 November.

In a statement today, Petrobras said lost production remains around 115,000 b/d, or 5pc of pre-strike levels. The company says the offer already accepted by most unions is the firm's final proposal.

On 14 November, the Sindipetro Caxias union, which represents workers at the 239,000 b/d Campos El?seos refinery (Reduc) in Rio de Janeiro, also voted to continue the strike. The union estimates crude processing at Reduc has been reduced by around 30,000 b/d.

Sindipetro Caxias members voted today to accept Petrobras' proposal and suspend the strike.

Oil workers fiercely oppose Petrobras' restructuring and asset divestiture plans.

The lingering strike comes against the backdrop of a new phase in an almost two-year police investigation into systemic corruption at Petrobras. Federal police today temporarily detained two former employees of Petrobras as part of their investigation into corruption in the construction of the 115,000 b/d Abreu e Lima refinery in the northeastern state of Pernambuco and the acquisition of the 100,000 b/d Pasadena refinery in Texas.

The refineries are among the assets that were deliberately overpriced in a scheme to funnel money to politicians mainly from the ruling Workers Party (PT), according to investigators.

Petrobras' former international director Nestor Cervero and former downstream director Paulo Roberto Costa have already been convicted of corruption and money laundering in connection with the Pasadena deal, which was approved during Brazilian president Dilma Rousseff's 2003-10 tenure as chair of Petrobras.

"This case is important because, who knows, we might be able to annul the sale or recover assets belonging to the Brazilian public," federal prosecutor Carlos Fernando dos Santos Lima said of the Pasadena refinery today.

The Brazilian court of auditors TCU has already said Petrobras' 2006 acquisition of the refinery from Belgium's Astra Oil cost public coffers nearly \\$800mn.

In a plea deal with prosecutors, convicted lobbyist Fernando Soares said Astra paid Petrobras \\$15mn in bribes for the initial acquisition of a 50pc interest in the refinery earmarked to process heavy crude produced from the 189,000 b/d Marlim field.

"Besides being obsolete and in a state of disrepair, this refinery had no capacity to process the Marlim oil," federal prosecutors said today.

In 2012, Petrobras was ordered by a US federal court to acquire Astra's remaining 50pc interest in the refinery.

Neither Petrobras nor Astra was immediately available to comment.