Update – Petrobras Workers Strike

Members of Brazil’s national oilworkers federation said on Wednesday that Petrobras was underestimating output losses. In a statement late Wednesday, Brazil’s biggest oil union federation said production cuts are as much as a quarter of Petrobras Brazilian output, or just over 500,000 barrels a day.

The union, though, did admit that it has not cut output as much as hoped. Production from the giant Roncador offshore oil field in Brazil’s Campos Basin continued on Wednesday even after production-vessel workers joined the strike, a union spokesman said, denying media reports of an output shutdown.

Petrobras management has said in the past that it can maintain operations with no impact to fuel supplies in Brazil for a week or 10 days at the most. It said Wednesday it bought 82,000 cubic meters (515,764 barrels) of gasoline from Brazilian petrochemical company Braskem, bolstering supplies in November.

Strike aims go far beyond a call for an 18 percent salary increase. They also seek to block planned asset sales, reverse budget cuts and protect Petrobras’ right to lead the bulk of new offshore oil development.

Petrobras has offered an 8.1 percent salary increase, but wages are not the key issue, union representatives say.

“This movement is a clear and open criticism of the government’s economic policies,” said Deyvid Bacelar, a union activist and worker representative on Petrobras’ board of directors.

Those goals, some of which can only be guaranteed by Brazil’s Congress, will be hard for Petrobras to meet.

Without $50 billion of planned assets sales and cuts to a five-year investment plan that was recently the world’s largest, Petrobras risks being unable pay its massive debts, Chief Executive Officer Aldemir Bendine told Congress last month.

If prolonged, the strike will worsen the company’s struggles to raise output and reduce debt, the Standard & Poor’s debt-rating agency said on Wednesday.

The government has little money or credit to help Petrobras as it grapples with a gaping fiscal deficit.

Reuters (Reporting by Jeb Blount; Additional reporting by Marta Nogueira; Editing by Grant McCool and Lisa Shumaker)