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Union Protest Stops Deliveries of Total’s Oil From Nigeria

The New York Times: Union Protest Stops Deliveries of Total’s Oil From Nigeria

“Violence around the city of Warri in March 2003 forced the Royal Dutch/Shell Group, ChevronTexaco and Total to halt 37 percent of Nigeria’s output for two weeks.”

By BLOOMBERG NEWS

Published: July 7, 2004

ROME, July 6 – Total, the European oil company, said on Tuesday that it would miss contracted deliveries of crude from Nigeria after a labor union ordered its members to stop work.

Total’s venture in Nigeria declared a halt “on all Nigerian deliveries,” a spokeswoman, Patricia Marie, said in a telephone interview from Paris.

The halt followed a brief resumption in production Monday at Total’s unit, Elf Petroleum Nigeria, a venture with the state-owned oil company, after a three-day suspension, Ms. Marie said.

Management initially stopped pumping operations on Friday because of safety concerns arising from the labor protests over job security, she said.

The lost output represents almost one-tenth of Nigeria’s output of 2.33 million barrels a day, according to Bloomberg data.

Ethnic and political violence in Nigeria routinely disrupts operations of international oil companies. Violence around the city of Warri in March 2003 forced the Royal Dutch/Shell Group, ChevronTexaco and Total to halt 37 percent of Nigeria’s output for two weeks.

Elf Petroleum Nigeria, the Total venture, normally produces 225,000 barrels of oil and 187 million cubic meters of natural gas a day.

The venture is the fifth-largest producer of Nigerian crude after operations run by Shell, Exxon Mobil, ChevronTexaco and Eni of Italy.

“Production resumed and was suspended again today after the union told the workers to stop,” Ms. Marie said. “Total and the union are meeting today in an effort to restart production.”

Members of the white-collar Petroleum and Natural Gas Senior Association of Nigeria are protesting what they see as potential job losses at Elf Petroleum, Ms. Marie said.

“There are some who are worried about losing their jobs, so they protested last week and the managers decided in the interest of safety to shut down production,” Ms. Marie said. “We won’t be laying off people; on the contrary, we will be taking them on.”

Shell’s venture in Nigeria, the biggest producer in the West African nation, has not been affected by the current protests, said Simon Buerk, a company spokesman in London.

Violence in the Niger River delta, home to a majority of Nigeria’s oil reserves, kills about 1,000 people a year, on par with conflicts in Chechnya and Colombia, according to a 93-page confidential report financed by Shell.

As production onshore in Nigeria becomes more dangerous, oil companies are drilling in deep waters offshore.

Shell and other partners are spending $2.7 billion at the Bonga project, which lies in water more than 3,280 feet deep.

Exxon Mobil and its partners are building the $2.5 billion Erha development in waters about 4,000 feet deep and 103 miles southeast of Lagos.

Crude oil for August delivery was up 3.3 percent, to $39.65 a barrel on the New York Mercantile Exchange. Oil has declined 7.1 percent from a record $42.45 a barrel reached on June 2.

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