OREANDA-NEWS. Brazil's embattled state-controlled Petrobras is quelling the impact of a prolonged labor strike on its offshore operations, but the union says refinery operations are now taking a hit.

The strike that started on 1 November is emerging as the largest oil sector labor action in Brazil since 1995, and it shows no sign of a short-term resolution.

Petrobras said late yesterday it lost 127,000 b/d of oil production on 5 November as a result of the strike, down from 134,000 b/d on 4 November. The lost output was 178,000 b/d, or 8.5pc of pre-strike output, on 3 November, and 273,000 b/d, or 13pc of pre-strike output, on 2 November, the first full day of the strike.

The FUP, a federation of oil unions, says Petrobras is deliberately underestimating the strike?s impact on production and that the actual loss is closer to 500,000 b/d, or 25pc of pre-strike levels.

In its latest update, the FUP says 30 of 48 participating platforms in the Campos basin have stopped production. According to Petrobras data, there are a total of 49 platforms in Campos, which accounts for most of Brazil?s oil production.

Output from the offshore Espirito Santos basin has also been affected. At the 104,424 b/d P-58 and 74,833 b/d P-57 platforms in the Petrobras? Parque das Baleias complex, workers started striking on 3 November.

Petrobras has brought in contingency teams to operate P-58, P-57, and 12 of the largest producing platforms in the Campos basin, including installations associated with the 254,000 b/d Roncador field.

Output in the Santos basin, where most of Brazil's sub-salt production is concentrated, appears to be unscathed so far. Santos is host to a number of blocks where big foreign oil companies have a presence, including the UK?s BG, Spain?s Repsol, Portugal?s Galp, but others such as Norway?s Statoil and its partner Chinese state-controlled Sinochem are in Campos. Statoil said yesterday its operations have not been affected. The company operates the 74,000 b/d Peregrino field.

Downstream, the FUP says workers at 11 of Petrobras' 13 domestic refineries are participating in the work action. It says crude processing at the 53,000 b/d Capuava (Recap) refinery in Sao Paulo state was reduced by as much as 50pc after a 3 November accident in a hydrotreater unit.

Brazilian labor law requires that a minimum number of workers maintain activity in high risk operations, including refineries, during strikes. Petrobras and oil regulator ANP have said there is currently no risk of a fuel supply shortage.

Petrobras says it has taken measures to ensure market supply. Among them, the 26 October purchase of 82mn l (515,764 bl) of gasoline from Brazilian petrochemical giant Braskem, in which the company holds a minority stake.

On 2 November, Fafen-PR fertilizer plant stopped production of 2,000 t/d of urea and 1,350 t/d of ammonia, corresponding to a daily cost of around R2mn ($529,000) to Petrobras, the FUP said.

Petrobras said it is taking all "appropriate legal measures to ensure the maintenance of its operations," but confirmed there are now "isolated cases of occupation of facilities and control of production, without permission for contingency teams to operate."

Oil workers are mainly striking against Petrobras' plans to raise more than $58bn in asset sales and corporate restructurings through 2018.

The federal government, Petrobras' majority shareholder, has already started informal discussions about a response to the strike, which threatens to upend Petrobras' plans to tackle its more than $130bn debt load.