Strike began at midnight, the first one in 6 years. It
is concentrated in the Campos Basin, which produces
about 80% of Brazil's petroleum.  Unless there is progress, 
workers intend to stay out until Sunday. 
Union said 70% of workers out.

Effects on Oil Production

On its first day, the strike of Petrobras workers
caused a drop of 60.2% in oil production, according to
the state-run company. Wednesday's output was 550,000
barrels, compared with 1.383 million on Tuesday. At
the Campos Basin (responsible for 80% of national
crude output) production plunged 76.2%, to 250,000
barrels from 1.050 million, according to Petrobras.
Production also dropped in Espirito Santo, Rio Grando
do Norte, Bahia and Alagos.

Folha de Sao Paulo newspaper reported that
distribution terminals Alemoa, Sao Caetano, Sao
Sebastiao, Guararaema, Guarulhos and Barueri, all in
Sao Paulo state, were paralyzed. In Rio de Janeiro
state the Macae and Governor's Island terminals were
stopped. Other terminals on strike were Vitoria and
Alagoas, according to Folha.

The United Oil Workers Federation, which represents 20
unions and 35,000 workers, said that the strike caused
production in the Campos Basin to decline 85% on
Wednesday. The union said that 37 out of 38 platforms
are paralyzed, pumping only natural gas. The union
said that crude production fell to 156,000 barrels
from 1.045 million barrels in the Campos Basin.
Production in other locations was slowed 70% to 80%,
according to the union.

Refined Products
According to union, only 2 out of 11 refineries (Minas
Gerais & Rio Grande do Sul) are still running.
Petrobras said that its 11 refineries produced 1.76
million barrels of gasoline on Wednesday; the union
gave no figure.  Petrobras' 2000 Refinery statistics are posted at
http://www2.petrobras.com.br/portal/ingles/frame_ri.asp?pagina=/ri/ingles/destaques/des_abastecimento.stm

Natural Gas

O Globo newspaper of Rio and O Estado newspaper of Sao
Paulo both said that natural gas production fell 34.2%
to 25 million cubic meters from 38 million cubic
meters.

Negotiations

Petrobras demands that strikers return to work at nine
platforms in the Campos Basin, to guarantee natural
gas production, and five others to prevent leakage as
a precondition to resuming negotiations Thursday
morning, Brazilian newspapers reported Thursday. The
union said it would take the issue to striking workers
and would give an answer Thursday morning.

According to Brazilian news reports, the company is
holding a second round of talks with the union. First
round earlier in day was fruitless. The union says
they want to see a better wage proposal than before if
they want workers to keep operations running at a
minimum.