Page last updated at 23:20 GMT, Monday, 14 July 2008 00:20 UK

Brazil oil stoppage hits output

Petrobras workers in front of an oil platform
Disruption could spread to all Petrobras facilities

The Brazilian state-run oil producer, Petrobras, says a strike which started on Monday has cut its production by 7%.

The union which called the five-day walkout says the cut in production was more like 22% - about 400,000 barrels.

Employees at 42 oilfields off the coast of Rio de Janeiro, are striking over working conditions.

Petrobras says there is a contingency plan to maintain output. However, a union spokesman said workers would do their best to disrupt production.

At the heart of the dispute is a union demand that a day spent travelling from oil platforms in the Campos basin to the mainland should be counted as work.

At the moment employees are paid for a shift of 14 days followed by 21 days of rest.

Bigger slice

The Campos basin accounts for 80% of Petrobras' daily production of 1.8 million barrels of oil.

But the Petrobras president, Jose Sergio Gabrielli, has been playing down the impact of the dispute saying that daily variations in oil prices do not have a great significance.

World oil prices on Friday hit a new record high, rising above $147 a barrel because of a range of factors, such as tensions over supplies from Iran and Nigeria.

But analysts said the potential strike at Petrobras was also having an impact.

The BBC's Gary Duffy in Sao Paulo says the situation has the potential to escalate, as further disruption is being discussed at all Petrobras facilities, including refineries and terminals, as part of union demands for a bigger share of profits for employees.

The company has recently announced a number of major oil finds offshore, which have attracted huge international attention.

But these are deep beneath the seabed and the costs of production, which is still several years away, are expected to be high.

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