July 14 (Bloomberg) -- Petroleo Brasileiro SA, Brazil's state-controlled oil company, said it restored 96 percent of output from its Campos Basin offshore oil platforms after an oil-worker walkout slashed production for much of the day.

The union representing 4,500 workers in the basin, source of more than 80 percent of Brazil's oil output, started a five- day strike at midnight to press for an extra day of pay for each two weeks worked offshore. At 6 p.m. (5 p.m. New York time) output was 63,000 barrels a day below full capacity, Petrobras, as the company is known, said in a statement sent by e-mail.

Earlier today, the union said the strike reduced output levels by as much as 400,000 barrels of oil a day. Petrobras, the world's sixth-largest company by market value, is trying to contain costs as producers compete for equipment and labor amid record oil prices, driving up rates for drilling rigs, production platforms and technical services. Brazil produced 1.56 million barrels of oil a day in the Campos Basin in June.

``The strike is going ahead, and we fully intend to make a big impact on output,'' regional union chief Jose Maria Rangel said in a telephone interview. ``We won't damage or hurt equipment, and we are ready to talk, but we have no intention of backing down.''

Union members today rejected a July 10 contract offer from Petrobras in meetings today and said the strike will continue, according to a statement on the union's Web site.

Brazil, the fifth-largest oil producer in the Americas, became a net exporter for the first time last year on rising output. Petrobras Chief Executive Officer Jose Sergio Gabrielli plans to increase production 79 percent by 2015 to the equivalent of 4.2 million barrels of crude a day, largely on the strength of so-called pre-salt fields off Brazil's coast.

Production to Rise

In November, Rio de Janeiro-based Petrobras said an offshore field called Tupi may hold 8 billion barrels of recoverable oil equivalent, the largest petroleum discovery in the Americas in more than three decades.

Petrobras produced 1.48 million barrels of oil a day in the Campos Basin last year, or 82 percent of Brazil's total, according to the company and the nation's oil regulator.

Brazil exports some of the crude oil from Campos because its refineries aren't fully equipped to handle the heavy grades. It uses the proceeds to buy lighter oil from abroad. Petrobras said fuel production hasn't been affected by the strike.

Petrobras won a Brazilian Labor Court injunction yesterday prohibiting workers from taking control of platforms or preventing management from doing necessary work to maintain the facilities and the integrity of wells during the strike.

Petrobras preferred shares, the company's most-traded class of stock, rose 28 centavos to 40.88 reais in Sao Paulo. Before today, the stock had dropped 6.6 percent this year.

Court Ruling

The court also ordered the union not to blockade the company's offshore support bases and ports in and around Macae, Brazil, north of Rio de Janeiro.

The union never intended to take any action that would harm company property or the operation of complex and potentially dangerous equipment, Rangel said.

Offshore crews, who work 14-day shifts at sea then are off for 21 days, are asking Petrobras to pay them for a 15th day because they must wake up and do regular tasks on the morning after their shifts end until they are relieved by other workers, Rangel said. Travel times of up to 40 minutes by helicopter to shore also limit free time available to employees, some of whom live thousands of kilometers away, he said.

To contact the reporter on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net.

Last Updated: July 14, 2008 19:50 EDT