By Peter Millard
(Bloomberg) — Petroleo Brasileiro SA said its oil and natural-gas production has been cut because of a strike by workers protesting job losses, spending reductions and asset sales at Brazil’s state-controlled producer.
The biggest output cuts came on Monday, the second day of the strike, when production fell 273,000 barrels a day, equal to 13 percent of Brazil’s daily output, Rio de Janeiro-based Petrobras said late Tuesday. Output rebounded but was still down 8.5 percent from pre-strike levels late Tuesday. Petrobras doesn’t expect the strike to disrupt its fuel-distribution network.
Those output estimates are less than the 500,000 barrels a day that Brazil’s main oil union, known as FUP, said was affected. The strike shut 25 offshore platforms and pared output at eight other units at Brazil’s main production zone in the Campos Basin, Francisco Jose de Oliveira, head of communications for the FUP oil union, said Tuesday in a telephone interview from Rio de Janeiro.
The strike is the latest in a series of setbacks for the Brazilian producer, which had its credit rating cut to junk in September as it tries to deal with a collapse in commodity prices and a widening graft scandal that has resulted in some of its suppliers seeking bankruptcy protection. The company is slashing investments and selling assets to reduce the biggest debt load in the oil industry.
“Given Petrobras’s current financial constraints, an easy resolution seems difficult, unless the workers back down,” Bank of America Corp. analysts Frank McGann and Vicente Falanga Neto said in a note to clients. “This makes this strike more of a worry than those in past years” when workers were mainly requesting wage increases.
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