>Latin America File: State oil workers at Brazil’s main production hub continue strike, petroleum agency’s communist chief manipulates markets

>The record-high prices of crude futures stumbled again today, falling from US$147 to $132 per barrel, only to meet–just in time–a walk out by Brazilian state oil workers. Yesterday Reuters reported, below, that “Oil workers in the Campos Basin, which produces 80 percent of Brazil’s crude, entered their second day of a five-day strike and said no sit down with the state-run energy company Petrobras was scheduled.” Pictured above: On March 26, 2008 Brazilian President Luiz Inacio Lula da Silva (right) and co-revolutionary Venezuelan President Hugo Chavez shake hands at the refinery that state-run entities Petrobras and PDVSA are jointly building in Recife, capital of Brazil’s northeastern state of Pernambuco.

Brazil oil workers may extend strike to refineries
Tue Jul 15, 2008 1:01pm BST

SAO PAULO, July 15 (Reuters) – Oil workers in Brazil may extend a five-day strike that started in the country’s main production hub to the rest of the country and include refineries and shipping terminals, union officials said Tuesday.

Oil workers in the Campos Basin, which produces 80 percent of Brazil’s crude, entered their second day of a five-day strike and said no sit down with the state-run energy company Petrobras was scheduled.

The national United Oil Workers’ Federation umbrella union, known as FUP, will meet Tuesday to discuss a wider strike over profit-sharing demands.

“Petrobras has said their offer is final, so we are now going to have some arm wrestling with them over that,” said Jose Genivaldo Silva, a director at the FUP. “Our strike proposal would affect the entire country and also include refineries and terminals.”

Petrobras implemented a contingency plan to shore up oil output with emergency staff on most platforms in the Campos Basin. The company said late Monday it was producing at 96 percent of its capacity of 1.8 million barrels per day.

Supply Director Paulo Roberto Costa had said output could recover fully by the end of Monday, but he and Petrobras officials were not available early on Tuesday.

“Petrobras has thin staffs that are not the best qualified people on those platforms. If something goes wrong, it will be a big problem,” said Aviraldo Menezes, director of the Norte Fluminense Oil Workers Union that covers oil workers on platforms in the Campos Basin.

A five-day nationwide strike of Petrobras workers in 2001 seriously reduced output and forced Brazil to import additional oil. Unions and the company have resolved their differences over the past few years without stoppages hurting production.

Initially localized in the Campos Basin, the United Oil Workers’ Federation’s five-day strike is garnering support throughout the country. Today FUP announced that unionized oilfield workers throughout Brazil would implement a 48-hour sympathy strike that will not contribute additional output disruptions. On July 14 BBC journalist Gary Duffy, who is based in Sao Paulo, correctly predicted that the Petrobras dispute had the “potential to escalate.”

The leftist government of President Lula da Silva, led by the Workers’ Party and the Communist Party of Brazil, is definitely aiding and abetting the Communist Bloc’s scheme to trash capitalism by forcing up oil prices to economy-stopping prices. In April, for example, Harold Lima, president of National Petroleum Agency, which regulates the Brazilian oil industry, announced that Petrobras had discovered an offshore oil reserve called Carioca. Lima suggested that the reserve may contain 33 billion barrels of oil, an unconfirmed volume that did not affect world crude futures, already on the ascent in early 2008, but which sent Petrobras shares soaring in Sao Paulo and New York.

Petrobras admitted: “More conclusive data about the potential of the discovery will only be known after the conclusion of the other phases of the evaluation process, and the market will be informed at the opportune moment.” Referring to the Carioca discovery, Citigroup Inc. analyst Tim Evans commented: “You’re talking about a reserve the size of total U.S. reserves. It’s a big, big number. Nobody really has data on what’s out there in the middle of the ocean.”

Upon some reflection it appears that Brazilian officialdom was attempting to manipulate world oil prices through the Carioca announcement but failed. This should prompt the astute observer of international affaris to ask: Who is Lima? The head of the National Petroleum Agency is a cadre of the Communist Party of Brazil. Brazilian-based journalist John Fitzpatrick charts Lima’s career through the communist insurgency that sought to do away with Brazil’s military dictatorship and Lima’s mishandling news of the Carioca oil reserve. Fitzpatrick concludes: “This was a perfect example of the iniquity of the Brazilian political system, which allows people to assume positions of great authority for which they are not remotely qualified.”

The news was hailed by investors and share prices in Petrobras rose sharply. However, a comment by the head of the National Petroleum Agency (ANP), Haroldo Lima, on April 14 suggesting that there were further deposits of oil which could be five times greater raised the stakes even higher and pushed up the share price of Petrobras and other associated companies not only in Brazil but all over the world.

You might think this would be good news for Brazil but it was not, since Lima not only jumped the gun but may have given inaccurate information and, at the same time, he completely mishandled the way major news involving publicly-traded companies should be communicated.

This was a perfect example of the iniquity of the Brazilian political system, which allows people to assume positions of great authority for which they are not remotely qualified. A glance at Lima’s biography on the ANP site shows that although he qualified as an electrical engineer, he has devoted most of his life to politics as a Communist.

The site gives a glowing description of him as someone who spent 10 years hiding from the military “organizing resistance to the regime.” He was captured when a meeting of the Central Committee of the Communist Party was “brutally attacked by the repression” according to the site and three party members were shot dead and five arrested, including Lima who spent three years in prison.

This is all good stuff if you are nostalgic leftist but hardly the type of corporate CV one expects of someone who is in charge of one of the most important agencies in the country. Some technical qualifications, experience as an executive and a MBA from a decent business school would be more appropriate albeit less exciting.

Lima became head of the ANP simply because the Communist Party, which has miniscule popular support, is a member of the alliance which supports President Luiz Inácio Lula da Silva’s government. He is just one example of incompetent politicians who have been given positions in which they can spend budgets worth billions of reais not only in regulatory agencies but state-controlled companies like Petrobras itself, electrical energy utilities and others.

Meanwhile, in a last ditch attempt to salvage the US motorist, this week President George W. Bush promised to rescind the executive order banning offshore drilling along the US coasts, on the proviso that Congress lifts its separate ban first. While one would expect US petroleum companies to leap at the opportunity to drill in US territorial waters, potentially high domestic demand has not prevented them from shipping refined output overseas where prices are often government subsidized.

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One response to “>Latin America File: State oil workers at Brazil’s main production hub continue strike, petroleum agency’s communist chief manipulates markets

  1. mah29001 July 16, 2008 at 9:43 pm

    >Hmm, I wonder why far left Democrats are not going after another group of speculators whom are driving up the oil prices. Those speculators are not Capitalists at all, but rather members of the semi-Communist dominated OPEC oil cartel.Chavez and his neo-Communist buddies, along with Mahmoud “Iwannajihad” Ahmadinejad are all members along with also Gaddafi of Libya. I wonder why no one has raised questions of OPEC being the major speculator in the rise of oil prices with OPEC’s close alliance with the Kremlin affiliated Gazprom.

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