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People enter and leave the headquarters building of Brazilian state oil company Petrobras in Rio de Janeiro September 24, 2010. REUTERS/Bruno Domingos

Petrobras cancels oil strike talks, union vows escalation

RIO DE JANEIRO – Brazil’s state-controlled oil producer Petroleo Brasileiro SA canceled talks with union leaders that were planned for Tuesday and aimed at settling a strike that is now in its ninth day.

Members of oil union FUP have been on strike at Petrobras, as the company is known, since Nov. 1 in the biggest labor action against it in 20 years. After the cancellation, FUP, the country’s largest oil workers federation, vowed to raise pressure on Petrobras.

“This is the moment to intensify,” FUP said in a statement late Tuesday, adding that the walkout was beginning to reduce output from refineries as well as crude oil and natural gas output.

The union wants Petrobras to reverse plans to reduce capital spending and force it to cancel asset sales designed to lower the company’s $130 billion debt, the largest of any oil company in the world. In a statement, Petrobras said it is working on “proposals” that could be presented to workers, without giving a timetable.

While the initial union salary request was for an 18 percent raise and Petrobras’ initial offer was 8.1 percent, the unions said salary is not the principal aim of the strike.

Once a new date for talks is set, workers will be informed, the statement added. In the past Petrobras officials have said it could resist major production cuts from a strike for about 10 days.

Related: Brazil’s Petrobras output hits all-time high in August

Petrobras’ press office said on Tuesday that the strike was cutting oil output by about 115,000 barrels a day, the same amount as Monday. That is equal to about 5.5 percent of pre-strike oil output in Brazil.

FUP said Petrobras was under-reporting production losses. The union estimates Petrobras has lost about 2 million barrels of production worth about 400 million reais ($107 million).

The output reductions include a 50 percent cut in production at the P-58 and P-57 platforms in the Jubarte field of Petrobras’ Parque das Baleias offshore field complex, FUP said.

At recent production levels, those two platforms alone would be responsible for 81,000 barrels of reduced oil output.

Petrobras declined to say from which fields output reductions were happening.

Output at the REDUC refinery near Rio de Janeiro has seen output cut by 30,000 barrels a day and the production of asphalt and petroleum coke almost totally stopped, FUP said.

It also says the strike cut Petrobras catalyst production and urea and ammonia

($1 = 3.7498 Brazilian reais)

(Reporting by Jeb Blount; Editing by Paul Simao, Matthew Lewis and Ken Wills)

This article was from Reuters and was legally licensed through the NewsCred publisher network.