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Brazil moves slow to normal as protests wind down


Petrobras said on Thursday that there was no impact on production due to the strike as its contingency plans were successful. Laborers were back on the job at 95 percent of the company's units, the company added.

By Pedro Fonseca and Gram Slattery

Petroleumworld 06 01 2018

Brazil showed signs of returning to normal on Thursday as an oil workers union ended a strike ahead of schedule and an 11-day trucker protest wound down, a welcome breather for a government suffering from rock-bottom approval levels.

Oil workers union FUP unexpectedly recommended on Thursday that members suspend a 72-hour strike they began on Wednesday after a court said the organization would be fined if it continued.

Meanwhile, the truckers protest, which has strangled much of Brazil's economy for 11 days, petered out. Brazil's minister of institutional security, Sergio Etchegoyen, said all roadblocks had been removed, though isolated groups of truckers were still causing problems.

The end of the strike is some rare good news for President Michel Temer, Brazil's least popular president since its return to democracy in the 1980s. The protests - which were widely supported by Brazilians - had seen calls among some strikers and fringe groups for a military coup. Temer said this week that there was “zero chance” of such an intervention.

It also provides some relief for state-led oil firm Petroleo Brasileiro SA, or Petrobras, as it is commonly known.

Petrobras has been caught between workers and some politicians that want the company to roll back recent market-focused policies, and investors, who are fleeing on fears that it may undo those changes. Its shares have tumbled around 30 percent in the past two weeks.

Petrobras chief executive Pedro Parente, who workers want to resign, is set to meet Temer on Friday morning.

Petrobras said on Thursday that there was no impact on production due to the strike as its contingency plans were successful. Laborers were back on the job at 95 percent of the company's units, the company added.


Gasoline supplies, which had become short in recent weeks as transport routes were blocked, returned to normal at 70 percent of locations, Aurelio Amaral, a director of Brazil's ANP oil regulator, told Reuters.

Santos, Latin America's largest port, was now functioning, Admiral Ademir Sobrinho said in broadcast comments. But a representative from shipping firm Maersk Line Ltd said the port was still far from operating normally.

“We have seen some critical imports being released from terminals in the Santos complex. Still, we expect Brazilian export volumes will continue to be seriously impacted for the next few weeks,” said Antonio Dominguez, managing director for the company's East Coast South America cluster.

At gas stations in Sao Paulo, Brazil's largest city, lines remained long. Produce at supermarkets cost more than usual in some locations, even as supplies were returning to normal.

Companies in the machinery industry were crafting plans with workers for collective vacations, while others were planning layoffs, the head of the industry's trade group, Jose Velloso, told Reuters late on Wednesday, as an inability to obtain supplies or deliver products hit virtually all firms in the sector.

To win over the blockading truckers, who were primarily protesting high fuel prices, the government agreed to lower the average cost of fuel by 46 centavos ($0.12) per liter.

To pay for the cuts, the government announced on Wednesday that it would slash a subsidy for exporters and reduce benefits for beverage makers operating in the Zona Franca low tax zone, which will hit companies such as Coca-Cola Femsa SAB de CV and Ambev SA.

Beverage industry group ABIR criticized the move, although the rival Afrebras group, which tends to represent smaller-scale producers - many of them outside the Zona Franca - called the change long overdue.

Those measures, along with other cost saving moves, will boost government coffers by 2.27 billion reais, authorities said.

($1 = 3.73 reais)


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Story by Pedro Fonseca and Gram Slattery; Editing by Grant McCool and Rosalba O'Brien from Reuters. 05 31 2018

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