Cablegate: Petrobras Workers to Launch 5-Day Strike in Campos Basin,

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RR RUEHRG
DE RUEHRI #0180 1931923
ZNR UUUUU ZZH
R 111923Z JUL 08
FM AMCONSUL RIO DE JANEIRO
TO RUEHC/SECSTATE WASHDC 4544
INFO RUEHBR/AMEMBASSY BRASILIA 0885
RUEHSO/AMCONSUL SAO PAULO 5169
RUEHRG/AMCONSUL RECIFE 3441
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UNCLAS RIO DE JANEIRO 000180

SIPDIS

E.O. 12958: N/A
TAGS: ENRG EPET EINV BR
SUBJECT: Petrobras Workers To Launch 5-Day Strike in Campos Basin,
Nationwide Strike Under Consideration

1. Summary. Workers for Brazil's oil giant Petrobras will begin a
five-day strike in the Campos Basin on July 14. The employees are
demanding additional compensation for travel days used to depart oil
platforms after 14-day shifts. Separately, the oil workers union is
considering a further nation-wide strike if their demands for a
higher share of company profits are not met. Negotiations between
Petrobras and union representatives are ongoing. The last
significant nationwide strike of Petrobras workers in 2001 saw
production seriously curtailed before an agreement was reached. End
Summary.

2. On July 14, about 4,500 Brazilian oil workers will begin a
five-day strike against Petrobras facilities in the prime
oil-producing area of the Campos Basin. The strike is part of a
long-standing effort by workers to get full pay for the travel day
on which they return to the mainland after completing a 14-day shift
on platforms. All forty-two of Petrobras' offshore rigs in the
Campos Basin, the source of nearly 80 percent of Brazil's current
oil production, will be affected by the strike. (Note: Several
international oil companies are partnered with Petrobras in the
Campos Basin, including U.S. firms Chevron, Anadarko and El Paso.)
"There will be minimal production if Petrobras accepts that the
production is controlled by the workers but if the company tries to
use its own teams, we will disconnect the equipment," union
spokesman Marcos Brida said to press.

3. The Campos Basin strike is not expected to significantly hurt
output since Petrobras has sufficient stocks built up to keep up
refinery production during the strike. More serious, however, is a
possible five-day nationwide strike against Petrobras being
considered by workers. The United Oil Workers' Federation (FUP)
umbrella union will meet on July 15 to discuss the possibility of a
five-day nationwide strike at all Petrobras facilities, including
refineries and terminals, to demand a bigger share of company
profits for workers. After a 24-hour warning strike on July 1,
Petrobras labeled the union labor protest a hasty measure and called
for talks to look for a solution.

4. According to FUP, workers are seeking at least 18 percent of
what is paid to shareholders, citing that Petrobras' profits and
market capitalization have been rising over the past few years,
helped by record world oil prices and new production. In 2007,
Petrobras paid USD 527 million in profit sharing to employees. But
Petrobras argues that its costs, including labor, have also jumped
due to the high cost of oil equipment and services prices. Its
latest proposal, offering a maximum of 12.8 percent, was rejected by
FUP on July 9.

5. The last significant nationwide strike of Petrobras workers in
2001 saw production seriously curtailed before an agreement was
reached. The five-day strike of seriously reduced output and forced
Brazil to import additional oil. Petrobras is hoping to avoid a
similar occurrence; negotiations will continue next week during the
Campos Basin strike.

6. This message was cleared/coordinated with Embassy Brasilia.

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