SHORTFALLS LOOM AS STRIKE CRIPPLES BRAZILIAN REFINERIES

Refined products shortages loom in Brazil as a result of a strike by oil workers there. The strike, which began Feb. 26, has paralyzed most of the country's 13 refineries, cutting combined average throughput of 1.2 million b/d by 80%. Brazil's government has begun importing products to restore stocks to comfortable levels. Shortly after the strike began, stocks fell to 3 days' consumption from a typical average 11 days.

March 11, 1991

3 min read

Refined products shortages loom in Brazil as a result of a strike by oil workers there.

The strike, which began Feb. 26, has paralyzed most of the country's 13 refineries, cutting combined average throughput of 1.2 million b/d by 80%. Brazil's government has begun importing products to restore stocks to comfortable levels. Shortly after the strike began, stocks fell to 3 days' consumption from a typical average 11 days.

The strike apparently is spreading to the upstream sector. Infrastructure Minister Ozires Silva estimated Brazilian crude production has fallen by 9%, or 65,000 b/d, as a result of the strike.

At the same time, the loss of more than 130,000 b/d of exports of Brazilian gasoline to the U.S. may be squeezing supplies there. Petrobras executives voiced concern about the relatively low level of gasoline stocks in the U.S. and tighter worldwide refining capacity as a result of war damaged or sabotaged refineries in Iraq and Kuwait.

STRIKE DETAILS

Union sources claim refineries in Rio Grande do Sul, Parana, Santa Catarina, Bahia, Maua, Cubatao, Sao Jose do Campos, and Campinas have been shut down except for essential services. Refineries in Espirito Santo, Alagoas, Sergipe, Rio Grande do Norte, Ceara, and Minas Gerais states have been partially affected. The refinery at Manaus in Amazonas state is being operated by Petrobras engineers.

As many as 300 workers have been fired, unofficial sources report. Petrobras and Sindipetro, the umbrella group representing 19 regional oil workers' unions, are at an impasse on negotiations. Ozires said layoffs will continue until the minimum number of personnel required to keep refineries functioning is reached, and the company will reopen negotiations only when strikers return to work.

Sindipetro s demands include:

A 161% wage hike.
Rehiring of fired workers.
Review of the government's drive toward privatization, notably the petrochemical and fertilizer sectors in Petrobras.

As a result of the strike, Brazilian President Ferdinand Collor de Mello's administration is continuing the national petroleum products rationing program that began Jan. 17 in response to the outbreak of shooting in the Persian Gulf. That program involves closing service stations after 8 p.m. weekdays and all day Sundays and holidays and reducing single purchase of propane for cooking.

The government estimates the rationing program has saved about 5 million bbl of oil since Jan. 17, at a savings of about $100 million.

ECONOMIC WOES

Critics, however, contend reduced petroleum consumption stems partly from a weakening economy.

Brazil's gross national product fell by 4.3% in 1990, the biggest drop since 1981. Brazilian industrial output fell by 8% last year. Collor's austerity measures and monetary squeeze to cut inflation have fallen short of expectations. Inflation last month still averaged 20%.

The government early in February announced a new antiinflation package, including a wage and price freeze and an end to indexing for inflation.

The government also took steps to boost free trade by cutting tariffs and thus lowering prices for domestic goods and allowing foreign participation in Brazilian mutual funds. Those measures followed a jump in the cost of government services of about 50%.