NIGERIA: PETROLEUM INDUSTRY REGULATORY BODY

C O N F I D E N T I A L LAGOS 000332

SIPDIS


E.O. 12958: DECL: 02/13/2013
TAGS: ELAB ENRG EPET EFIN PGOV NI
SUBJECT: NIGERIA: PETROLEUM INDUSTRY REGULATORY BODY
EMPLOYEES PLAN STRIKE ON FEBRUARY 14


1.(U) After issuing a 14-day ultimatum on February 1, 2003
to the GON, Petroleum and Natural Gas Senior Staff
Association of Nigeria (PENGASSAN) announced plans for a
nationwide strike beginning February 14 by its members within
the Department of Petroleum Resources (DPR),Nigeria's oil
and gas industry regulatory body. According to PENGASSAN,
the strike was called in response to the GON's refusal to
allow the DPR to operate as an autonomous agency. The strike
by the PENGASSAN DPR employees is scheduled to begin
off-shore and may take on a wider dimension if demands are
not met within the first few days.


2.(U) DPR is responsible for reviewing oil licenses,
measuring volume and maintaining quality control, and
authorizing crude oil exports. Since 1991, DPR employees
have rejected efforts by the GON to integrate the department
into the federal government because DPR salaries are higher
and benefits are better than those of federal workers. Four
years ago, the National Assembly approved a bill to ensure
DPR's autonomy; however, the Obasanjo administration has not
approved the bill.


3.(U) Econoff spoke with Mac A. Ofurhie, Director, Petroleum
Resources at DPR on February 13 who stated that the parties
"are trying to sort everything out in dialogue" to avert a
strike. Despite the role of DPR in authorizing crude oil
exports, Ofurhie said there will be no problem with product
movement and that "we do not have to worry."


4.(C) LabOff contacted U.S. oil company managing directors to
discus the reports of a pending strike. They were unawre
of it. One executive opined that a strike woud have no
short-term effect on production since ost storage tank are
currently empty; the compaies can continue to extract oil
for at least tendays before reaching storage capacity. He
addedthat as companies move closer to storage capacity, he
GON will likely intervene to authorize crude oil exports by
Nigeria. He warned the USG to be cautious in its discussions
with PENGASSAN and the DPR because they may use U.S. concerns
as leverage to intensify their industrial action. Our source
added that although it is unlikely that the PENGASSAN
representatives working within the oil companies will join
the strike, they plan to meet this Friday to assess the level
of their interests that might be involved in the DPR dispute.


5.(C) Comment. Officials of the National Union of Petroleum
and Natural Gas Employees (NUPENG) have told us that it has
no plans to get involved in the proposed strike. While
PENGASSAN endorses the idea of a strike, except for the small
group of DPR employees, the other members of PENGASSAN have
no plans to strike. Although the oil companies we contacted
believe the dispute will not affect production in the
short-term, a "worse case scenario" involving a prolonged
work stoppage could slow the movement of Nigeria's crude oil
exports. End comment.
HINSON-JONES