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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: Art Baeckel who wrote (21185)	7/31/2000 7:46:46 AM
From: Art Baeckel	Read Replies (2) \| Respond to of 22640

Brazil oil spill leaves a stain on Petrobras Reuters Company News - July 30, 2000 13:11 Copyright 2000 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. Jump to first matched term By Shasta Darlington RIO DE JANEIRO, July 30 (Reuters) - While the president of Brazil's state oil giant Petrobras jetted around Europe this week on a roadshow to promote the company's stock, workers at home mopped up the last of Brazil's worst spill in 25 years. The state Goliath impressed investors with its oil output and bulging net profit but a series of embarrassing oil spills has tarnished Petrobras's image and raised questions about how effective the oil giant is in policing its vast network. Just two weeks ago, a pipeline at one of Petrobras's refineries burst, spewing 1 million gallons (4 million litres) of crude into the Iguacu River in southern Brazil. It was Petrobras's third oil accident in six months. "The scariest thing about the disaster was Petrobras's complete lack of preparedness," said Teresa Urban, an environmental activist at Rede Verde who accompanied the cleanup efforts. "The company showed incompetence in preventing the accident and even more incompetence in reacting quickly to clean it up despite its recent track record," she added. In January, a ruptured pipeline at a Petrobras refinery in Rio de Janeiro's scenic Guanabara Bay oozed 350,000 gallons (1.3 million litres) of oil into the bay, killing hundreds of fish, birds and plants. Ecologists say it will take 10 years to recover from the disaster. "We cannot allow a company the size of Petrobras to get away with at least two serious accidents in less than a year," Environment Minister Jose Sarney Filho said after the latest spill. In June, a Petrobras tanker also dumped almost 100 gallons of oil into the same bay when it washed out its bilges. Some activists claim Petrobras has left environmental concerns behind in its rush to make the company more competitive in an increasingly open oil industry and in its effort to make Brazil self-sufficient in oil production by 2005. Petrobras has slashed inefficiencies and in the first quarter turned around a net loss into a healthy profit as dozens of multinationals broke into the market, snapping up oil exploration licenses in auctions that marked the end of the Goliaths 45-year monopoly on the industry. "It seems like a spell has been cast over Brazil in terms of oil spills," said Delcio Rodrigues, a lead campaigner for Greenpeace in Brazil. "But there is nothing supernatural about it; Petrobras is investing everything in boosting production and nothing in prevention." Workers complain that beefing up the bottom line has meant halving the work force as Petrobras switches to automated systems and outsources to less qualified labourers. While analysts cheer the "reduction in inefficiencies," workers complain that their number has been slashed to 34,000 from 61,000 10 years ago. The company has also installed sophisticated equipment without proper training for employees, they say. "We have found that the number of spills and accidents rises as the number of workers falls," said Mauricio Rubem Franca, coordinator of the Federation of Petrobras Oil Workers. "There's no reason to think the spills will stop until the situation is changed," he added. Financial analysts say the accidents are nothing but a streak of bad luck, but admit that the negative image could dampen domestic interest in the company's stock as it tries to sell off some $4.4 billion in shares. Petrobras has moved quickly to fend off criticisms. Following the January spill, the company declared accident prevention a priority and set aside $1 billion to "reach a state of environmental excellence by 2003." But unfortunately for the state-owned giant, the announcement came just a month before the latest incident, undermining confidence in its efforts. Upon arrival from his foreign tour to promote the public share offering, Petrobras president Henri Philippe Reichstul announced late Friday a second emergency plan. "We are trying to correct 20 years in which the environment was not a priority and that is going to take time," he said. "This last accident showed that we have to build a kind of emergency bridge until we arrive in 2003." As a result, Petrobras said it is switching oil production workers to prevention and cleanup to create eight emergency centres - "kind of like eight SWATS" - and is moving up investments in safety. But environmentalists and frustrated residents alike are not convinced the measures will bring results. The same refinery that suffered a pipeline rupture two weeks ago had already won a certificate of environmental excellence. "Petrobras announces prevention and risk plans but it seems that they never make it any further than the paper they're written on," said Urban.