Protests, Strike Against Big Brazil Oil Auction Expand

21.10.2013 -

Brazilian oil workers said on Friday they managed to reduce oil and fuels output from state-run oil company Petroleo Brasileiro for a second day after launching a strike for higher pay and against a planned auction of the country's largest-ever oil discovery.

Platforms in the Campos Basin run by Petrobras, as the company is known, have been below full capacity for 36 hours, said Marcos Brida, the press spokesman for Sindepetro Norte-Fluminense, the union responsible for Petrobras offshore production platform and land-terminal workers in the Campos Basin, home to about 80% of Brazil's oil production.

Brida also said contingency teams for Petrobras suffered two "small" oil spills at the PCE-1 and P-15 oil platforms in the Campos Basin. The union also announced the spills in a note. Petrobras officials were not immediately available for comment.

Sindepetro Norte-Fluminese is part of a national strike by Brazil's National Oilworkers' Federation (FUP) that began at midnight (0300 GMT) on Thursday. It has seen workers walk off the job at most of Petrobras' 12 refineries, some of its oil terminals and pipelines plus scores of oil production sites.

Natural gas and oil pumping operations and fuel production at refineries were also reduced, said Alessandra Muteira, press official for FUP in Rio de Janeiro.

Neither Brida nor Muteira were able to quantify the reductions. Petrobras was not immediately able to comment on the strike. Petrobras has said it has contingency plans to ensure that energy and fuel supplies are maintained during strikes and that the safety of its facilities is not compromised.

Strikes have rarely had any significant impact on output or supplies in Brazil. Top Petrobras officials have told Reuters in the past that the company can face strikes of about two weeks without any major impact.

To prevent the strike from interfering with the auction of the massive offshore Libra field on Monday, the government will provide police and army units to ensure the smooth operation of the sale. On Thursday, oil workers briefly occupied Brazil's mines and energy ministry in Brasilia in protest.

Libra holds an estimated 8 billion to 12 billion barrels of recoverable oil, according to both Brazil's oil regulator and Dallas-based oil-reserve certification company Degolyer & MacNaughton (D&G).

If the projection holds up, Libra could nearly double Brazil's oil reserves or have enough oil to supply the world's crude demand for as much as 19 weeks.

Libra, billed by the government as the largest offshore oil are ever sold, is the latest in a series of "subsalt" finds beginning in 2007 that struck oil southeast of Rio de Janeiro, trapped deep below the seabed by a layer of salt.

Brazil is expected to get at least $7 billion in up-front fees from the winning company or group. Petrobras by law will have to take a minimum 30% stake in any winning group and run the project as operator.

Opposition to the sale of Libra is strong among Petrobras unions. The unions still protest the 1997 end of Petrobras' monopoly over exploration, production and refining and regularly attack any non-Petrobras involvement in oil production, whether the involvement is domestic or foreign.

The union's nationalist sentiment is shared by many in Brazil. The creation of Petrobras 60 years ago this month is still considered by many, especially older Brazilians, as an act of national liberation.

Ildo Sauer, a former Petrobras gas and energy chief, has filed a lawsuit seeking to block the Libra sale. To date, oil regulator ANP has managed to get all suits seeking injunctions against the sale quashed.