Brazilian oil workers continue with strike; output unaffected

Rio de Janeiro — Brazilian oil workers remained on the picket line for a third consecutive day Monday in a limited strike protesting the closure of a fertilizer plant and ongoing asset sales at state-owned Petrobras, but the work action left output from refineries and offshore platforms unaffected, union and company officials said.

"Our units are operating within normal safety parameters, with contingency teams activated when necessary," Petrobras told S&P Global Platts in an email. The strike started at 12:01 am local time (0301 GMT) Saturday, according to umbrella union the Oil Workers Federation (FUP).

The latest strike came amid an ongoing standoff between Petrobras and unions representing oil workers, which have lost negotiating power as Petrobras shed contract workers under cost-cutting measures and outsourced much of the subsalt production to third-party service companies such as SBM Offshore and Modec in recent years.

Oil workers want Petrobras to curtail an asset-sales program that will see the company slash about $20 billion-$30 billion worth of assets from its balance sheet over the next five years. That followed the sale of stakes in several major offshore oil fields, natural gas distribution companies and gas pipeline networks after Petrobras in 2019 won a Supreme Court case that ended lawsuits brought by oil workers aimed at disrupting the sales.

The industrial action, however, has followed similar recent action that union officials refer to as a "warning strike." Warning strikes typically include a refusal to report for shift changes at refineries, terminals and platforms as well as work-to-rule actions at other sites that maintain operational security. The warning strikes do not target production cuts at oil platforms or refineries, according to the union.

The unions, however, have faced increased legal challenges to walkouts from Petrobras under the leadership of CEO Roberto Castello Branco. A similar five-day strike in November was halted early after Petrobras won an injunction blocking the walkout. According to Petrobras, the latest action is illegal because oil workers agreed to a new collective bargaining agreement in November.

"Petrobras reiterates that it considers the actual strike movement at some of our units unjustified, give that the collective bargaining agreement was signed by all unions in November 2019 and scheduled talks are following their normal course," the company said.

Oil workers have refused to change shifts at all 13 of Petrobras' 100% owned and operated refineries since early Saturday, FUP said. In addition, 21 floating production units in the Campos Basin were working to rule, according to the union. Workers at oil and refined product terminals as well as administrative centers have also taken part in the action, FUP said.

A FUP negotiating team also has occupied a meeting room at Petrobras' iconic Rio de Janeiro headquarters building since Friday, with the company cutting water and electricity service to the room over the weekend, union officials said. Service was eventually restored, the union said.

The union wants Petrobras to suspend layoffs related to the closure of the FAFEN-PR nitrogen fertilizer plant in Parana state and other measures it argues were unilaterally imposed by company management during the most recent collective bargaining negotiations.

The strike will continue for an undetermined amount of time, FUP said.