Brazil refinery workers go on 72-hour strike

30 May 2018 19:26 Source:ICIS News

HOUSTON (ICIS)--The Federation of Petroleum Workers (FUP) went on a 72-hour strike on Wednesday, targeting all but three of the refineries of state-producer Petrobras.

Photo from Federation of Petroleum Workers (FUP)

The strike will not threaten fuel supplies, the union said.

The general coordinator of the FUP, Jose Maria Range, said that the tanks of the refineries are already full because of a previous nationwide strike by truck drivers, which prevented much of the fuel from leaving the sites.

The following lists the refineries covered by the strike, the union said. Capacity is listed in bbl/day.

Refinery City State Capacity
LUBNOR Fortaleza Ceara 8,000
RECAP (Capuava) Capuava Sao Paulo 53,000
REDUC (Duque de Caxias) Duque de Caxias Rio de Janeiro 239,000
REFAP (Alberto Pasqualini) Canoas Rio Grande do Sul 201,000
REGAP (Gabriel Passos) Betim Minas Gerais 157,000
REMAN (Isaac Sabba) Manaus Amazonas 46,000
REPAR (Presidente Getulio Vargas) Araucaria Parana 208,000
REPLAN (Paulínia) Paulínia Sao Paulo 415,000
RLAM (Landulpho Alves) Mataripe Bahia 315,000
RNEST (Abreu e Lima) Ipojuca Pernambuco 74,000

Only three Petrobras refineries are untouched by the strike. In addition, Brazil has three small refineries that are not owned by Petrobras and that are not part of the FUP strike.

In addition to the refineries, the FUP strike also covers nitrogen-fertilizer plants in the states of Parana and Bahia as well as terminals and production platforms.

Refineries are important to Brazil's petrochemical industry because it relies mostly on naphtha as a feedstock for its crackers. In addition, refineries produce aromatics and propylene, which can be used as feedstock.

Since most of Brazil's crackers use naphtha, it is less dependent on refineries for these intermediates than the US, where most of the crackers are gas-based.

The union is protesting several recent changes at Petrobras.

It opposes the new pricing policy of the company, which gives it more flexibility.

In the past, the government had more control over fuel prices, and it pressured Petrobras to keep them below international rates. The result gave Brazilians lower prices for gasoline and diesel, but it caused Petrobras to lose millions.

That policy changed in July 2017, and Petrobras has exercised that flexibility to increase fuel prices, in response to a weaker national currency and to higher oil prices.

The FUP also opposes the privatisation of Petrobras. Earlier this year, the company disclosed a plan to sell stakes in four of the country's largest refineries.

The FUP is requesting that Petrobras CEO Pedro Parente leave the company. He became the head of the company in mid-2016.

The union accused Parente of attending to market interests instead of the needs of the people.

Petrobras did not immediately respond to a request for comment about the union's allegations about Parente.

The union also wants domestic fuel production to increase and for fuel imports to end. While Brazil exports crude oil, its refineries do not produce enough to meet domestic demand for diesel and gasoline.

In a news release, Petrobras said that contingency teams are working when necessary, and the strike has not affected production.

Nonetheless, the nation's Superior Labour Court (TST) had declared the FUP strike illegal, following a request by Petrobras and the attorney general (AGU). They alleged that the union's grievances are political in nature and not labour related.

The TST will charge daily fines of real (R)500,000 ($134,000).

The FUP started its strike just days after the truck union (ABCAM) called an end to its own nationwide strike, which crippled the country.

Brazil relies predominantly on trucks to receive raw materials and distribute finished products because its rail system is paltry.

Polyolefins producer Braskem said it had lowered rates at its industrial units in all of Brazil because of the strike. Other chemical producers, such as AkzoNobel, BASF and Elekeiroz, also reported disruptions because of the strike.

ARLANXEO's plants are running according to the company's monthly production schedule, the company said on Wednesday. Some shipments could face delays because fewer trucks are available and because of leftover highway blockages from the strike.

Solvay Group's Rhodia said on Wednesday that some of its operations are being impacted by the truckers blockading of highways. It has informed customers and is "preparing to regulate recovery of some of its production units and delivery of products, so the transport situation is normalised".

($1 = R3.74)

By Al Greenwood