Petrobras Oil Workers Began A Nationwide Strike To Block Asset Sales

The nationwide strike started by the FUP to block the company's assets is costing the company.

Brazil nationwide main oil union puts the work on halt on Sunday to stop state-controlled Petroleo Brasileiro SA from cutting down their investments to markdown the extensive debt burden in the oil sector.

The Oil Workers Federation, also called FUP, regional member union began strike on Oct 29. It informed that the nationwide preventive strike started on November 1. FUP also demands for the oil and gas provider to maintain Buy in Brazilian policies to encapsulate jobs, continue investments in the purification network, and an assurance that remain the solitary operator in Brazil's sub-salt offshore oil area. 

Petroleo Brasileiro Petrobras said halting work in some unit would not have any impact on its production or distribution to the market. The oil and gas company was already struggling to deal with the spreading bribery accusation that has caused some of the organization’s suppliers to look in to bankruptcy protection. The oil company, for the last one year, has seen its stock price go down to 62%. To make the situation critical, crude oil prices are continuing their downward trend following the US-Iran nuclear deal. This strike is current in a series of hitch for the Brazilian producers, which had its liabilities inclined to non-investment grade in September, as it struggles to cope with a calamity and a decline in the commodity prices.

Petrobras has proposed to accommodate the union with 8.1% wage and plans to persistently toss around with the union, said by the company in the statement. As mentioned on the website, the union has been in the haggle with the company for a few months now. The oil company plans to sell off its assets worth $15.1 billion this year and in the coming year 2016 to boost cash for debt abate and investments. This will help it to build the trust again of the investors and attract new capitalists.

The debt, which is around $ 120 billion, is the most of any oil company. On October 24, Petrobras's board members sanctioned the sale of a 49% stake in its gas pipeline unit, Gaspetro, to Mitsui & Co Ltd. for 1.9 billion ($490 million). It is attempting to improve its financial condition by cutting costs aggressively but this recent strike by the Federal Petroleum Workers Union will cost it and it will not be able to reach its goals. This adds to the issues and challenges. 

PBR stock closed at $5.02 on November 2.