Next week, the Brazilian state-owned oil company will start a roadshow to attract investors from the United States, China, Mexico, Canada and the United Kingdom, amidst an unfavorable environment. Since November 1, workers of Petrobras that are part of the Oil Workers Federation (FUP) stopped the production to protest against the divestments plan announced by the company some months ago, which includes suspending temporarily some investments in refineries and other plants under construction. In addition, the oil company plans to sell assets for up to $15.10 billion between this year and 2016, due to the crisis it faces regarding its accountability and its reputation.
Although in the last week ten of thirteen unions that compose the FUP decided to accept the labor conditions offered by Petrobras in the roundtable, others insist on their position of extending the strike, which has already become the longest in the last 20 years. Thus, Norte Fluminense, Espírito Santo and Minas Gerais unions promised to “intensify” the strike, as well as the Federação Nacional dos Petroleiros (FNP), the country’s second biggest union.
Just few days before Petrobras’ roadshow, reaching an agreement seems unlikely due to the relevance of the unions that remain striking. The Norte Fluminense union gathers workers from offshore platforms in the Campos Basin, where around 80 percent of the Brazilian crude is produced. Petrobras calculated that the strike caused losses of 115,000 barrels per day, according to the latest bulletin published by the state-owned company. However, the company maintains its production target at a daily average of 2.1 million barrels in 2015.
It remains to be seen how the negotiations of contracts with strikers end, but it is undeniable that Petrobras is facing a situation never seen before due to the Brazil’s serious economic crisis, falling oil prices and investigations with respect to the corruption scandal in which it is involved, known as ‘Lava Jato’. According to experts, another strike –the previous strike took place in the summer of 2015- generates a very adverse effect when it comes to attracting the necessary investments to boost the country’s top projects, located in the pre-salt and considered very risky, given the current situation of prices.
In addition, like foreign oil companies, the Brazilian company lost around $1 billion in the last quarter, and in the first nine months of the year, its net profit was 58 percent below the previous year, according to quarterly data published on past November 12. Results were not welcomed by investors and their preferential shares contracted by 3.83 percent. In addition, Petrobras cumulates a debt of $130 billion, the biggest in the industry.
Post by Jorge Neri Bonilla