Petrobras Growing Strike Stops Offshore Oil Production

Published at 09:14AM - 04/11/15

Brazil’s offshore oil and gas production is being hit, after rapidly growing strike action shuts down refineries and offshore platforms.

The strike action was called by Brazil’s biggest oil workers union, the Oil Workers Federation, also known as the FUP, in a row with the Petrobras board over the job losses and a number of assets  the firm is putting up for sale.

According to Petrobras, the ongoing strike is effected around 13% of the company’s daily oil production equal to 273,000 barrels, and 14% of the firms daily gas production, equal to around 7.3 million cubic meters of gas.

However, many analysts are putting the effects far higher, at around 500,000 barrels of oil per day. 

Offshore Shutdown

The FUP union’s own estimates put the figure at around 450,000 barrels of daily oil production.  Further the FTP claim that their ever growing strike is now spread across 45 of Petrobras’ offshore oil and gas platforms.

In a press release, the union claimed that of the 45 platforms, 25 have been shut down completely, whilst 8 are producing with restrictions and the remaining 9 have been handed over to ‘contingency teams’.

The FUP have also given details of a swathe of onshore facilities belonging to Petrobras where members have walked out on strike causing them to be shutdown.

Petrobras Problems

Petrobras is in deep troubles at every turn.  On the one hand, the company is making huge losses owing to it over stretching itself in the times of high oil prices, only to see the current price of oil not able to pay its bills.

On another, the firm is involved in a seemingly endless corruption scandal that makes the problems at footballs governing body FIFA look amateur. 

Not a day passes in Brazil without more information coming from the Brazilian courts, of bribes and kickback schemes that run from the bottom of the company all the way to the top, and in some cases further into the Brazilian government.

Further, in a bid to rescue itself from growing troubles, Petrobras has been ending contracts it holds with offshore contracting companies months and even years earlier than the contracts state. 

Companies are owed hundreds of millions in the torn up contracts, with many spectators commenting that the Petrobras actions are illegal.

Some of the companies hit by Petrobras’ actions are now starting to hit back looking to recoup the monies owed through courts.

With regards to Petrobras’ next step- they have planned to sell over US$15 billon worth of assets over the coming year, and more than US$58 billion by 2019.