BRAZIL'S OIL INDUSTRY CRIPPLED BY WALKOUT

A strike by employees of Petroleos Brasileiro SA has put a huge dent in Brazil's oil and gas production and refining operations. Petrobras Pres. Ernesto Teixeira Weber last week said about 70% of onshore workers and 90% of offshore workers had joined the strike since the walkout began Sept. 11. There are about 55,000 oil workers throughout the country. The central issue is money. Workers want a 370% wage hike to catch up with inflation-15% in August alone. Petrobras is willing to grant

Sept. 23, 1991

2 min read

A strike by employees of Petroleos Brasileiro SA has put a huge dent in Brazil's oil and gas production and refining operations.

Petrobras Pres. Ernesto Teixeira Weber last week said about 70% of onshore workers and 90% of offshore workers had joined the strike since the walkout began Sept. 11. There are about 55,000 oil workers throughout the country.

The central issue is money. Workers want a 370% wage hike to catch up with inflation-15% in August alone. Petrobras is willing to grant only 80%.

Before the strike, Petrobras was producing 700,000 b/d. That volume had plunged to 147,000 b/d by Sept. 16.

Gas production, normally 18 million cu m/day, had plummeted to 3.7 million cu m/day.

With nine of Brazil's refineries closed, product output slid to 140,000 b/d from 1.2 million b/d. Strike leaders said almost all terminals that pump products to distribution centers were shut down.

There were reports that some of the 24 platforms in the Campos basin off Rio de Janeiro state had been occupied by workers. Strikers also were reported to have stopped helicopters and boats from going to platforms in the basin, which normally produces about 440,000 b/d.

PETROBRAS' FUTURE

Although the umbrella organization representing Brazil's 19 oil worker unions said the central issue was wages, the strike also involved political questions concerning the future of Petrobras.

Since Oct. 3, 1954, Petrobras has operated as a monopoly. Under the Constitution promulgated in 1988 risk contracts were abolished for private domestic and foreign companies.

The Collor administration that took office in March 1990 recently submitted to Congress proposals for amendments to the Constitution allowing the return of risk contracts and ending Petrobras' monopoly. Collor was elected with a political platform preaching deregulation, privatization, and economic reforms designed in large part to curb inflation, which was raging at an 80%/month clip when he took office.

Privatization faces opposition in Congress and among large sectors of the population.

The Association of Petrobras Engineers reported at the beginning of this year that about 10 million Brazilians depend directly or indirectly on the petroleum industry for their living. About 2,000 suppliers of material and equipment and 5,000 service companies depend on Petrobras.