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Nigeria Oil Union Claims Strike Halts Oil Output

The Wall Street Journal: Nigeria Oil Union Claims Strike Halts Oil Output

DOW JONES NEWSWIRES

June 9, 2004 11:26 a.m.

Posted 10 June 04

LAGOS — A nationwide strike against high fuel prices has stopped Nigeria’s oil production and tanker loading, a top union official claimed Wednesday. “The action is total, the reports from our field offices indicate there is no loading and no production taking place,” said Joseph Akinlaja, secretary general of the National Union of Petroleum and Natural Gas workers.

But a spokesman for Royal Dutch/Shell Group (RD) and ChevronTexaco Corp. (CVX) said operations were continuing as normal.

Traders also said they had yet to see an impact from the nationwide strike.

“We are assessing the impact of the court ruling on the threat of (the) strike and the impact of both on our operations,” said a spokesman for Shell Petroleum Development Company, a unit of Royal Dutch/Shell Group (RD).

A Federal High Court in Abuja Tuesday issued a ruling, stating that the government must revert to a price of 38 naira per liter of petrol, down from the current price of between 49.9-52 naira/liter, while labor must suspend its threat to embark on a strike.

However, this ruling may have been too last-minute to have any effect, and the strike commenced Wednesday morning as planned. The government appears unlikely to abide by the court ruling either, as it is desperate to raise prices so that it can stop subsidizing domestic fuel imports.

Union leaders were due to meet the labor minister and officials of the state-owned oil company to find out if the government would comply with the court order, the blue-collar Nigeria Labor Congress leader Adams Oshiomhole told the Associated Press in Abuja.

Shell is the biggest foreign oil company in OPEC-member Nigeria, producing about half of the 2 million barrels a day coming from Africa’s biggest producer. ChevronTexaco Corp (CVX), ENI SPA (E) and Total SA (TOT) also have operations there.

“We’re watching things very carefully. We understand there are talks going on between labor and government. In terms of oil and gas activities, everything is normal,” a ChevronTexaco spokesman said.

Total also said operations were normal.

It hasn’t been possible to independently verify the union’s claims. Traders say so far there appears to be little impact.

“The Nigerians know what’s important for their economy and that means getting their oil exports out. While there’s endless problems trying to get products into the country, when it comes to exports, we don’t foresee any major problems,” a trader said.

“Oil companies operating in Nigeria have made contingency plans in order to continue exporting,” said Barclays Capital oil analyst Kevin Norrish.

“The strike would have to last for some time before export levels are impacted in our view,” he said.

Prior strikes over the nagging issue of domestic fuel prices haven’t significantly slowed oil exports. Nigeria relies on fuel imports because its refineries are inefficient. The newly deregulated gasoline market has been raising prices to keep up with rising world crude oil prices.

Union officials say this strike will hobble oil production.

“We have given instructions that our members should stay at home and we expect those instructions to be obeyed,” Brown Ogbeifun, President of Petroleum and Natural Gas Senior Staff Association of Nigeria or Pengassan, told Dow Jones Newswires Wednesday.

Schools and markets in Lagos are closed, while traffic on the roads is thin, with most people walking.

-By Vincent Nwanma, Dow Jones Newswires, +234-1-585-0849; [email protected] (Mark Long, Norval Scott, Adam Aljewicz and Shai Oster in London contributed to this article.)

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