Nigerian Crude Not Yet Flowing from Total -

UNCLAS LAGOS 001383

SIPDIS

STATE PASS TO EXIM, OPIC AND TDA
LONDON AND PARIS PASS TO AFRICA WATCHERS
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E.O. 12958: N/A
TAGS: EPET EINV ELAB PGOV ECON NI
SUBJECT: Nigerian Crude Not Yet Flowing from Total -
Other Union Actions Pending


1. Contrary to media reports that an agreement between
the French oil company Total and Nigeria's white-collar
oil workers union PENGASSAN has been reached allowing
for immediate resumption of the company's crude oil
production, O.B. Haffner, Corporate Affairs Manager for
Total Nigeria, told ECONOFF on Thursday morning, July
8, that there is no final agreement between the parties
and that production has not resumed. He suggested
negotiations are ongoing and may be close to
resolution, and said he would have a clearer indication
of their progress and possibly a timetable for
restarting production by 3:00 p.m. local time on July

8.


2. On Wednesday evening, July 7, Haffner reiterated the
company's public statements that oil production was
halted as a precautionary measure due to a "degraded
safety situation" resulting from a union dispute over
perceived inequities involving expatriate versus
Nigerian hiring for high-skill jobs. Haffner told
Econoff Wednesday morning that the company expected to
be pumping crude again by the end of the weekend or
early next week.

OTHER PENDING UNION ACTIONS


3. Meanwhile, the umbrella union organization Nigeria
Labour Congress (NLC) publicly softened its position on
a threatened industrial action over the state of the
nation's refineries after what were deemed fruitful
discussions between the NLC and GON officials regarding
pension reform. But simultaneously, the NLC issued new
strike warnings in conjunction with fuel prices. NLC
representatives were quoted as saying prices have risen
contrary to a court ruling of mid-June that resolved a
two-day nationwide strike over the consumer price of
gasoline.


4. ExxonMobil and PENGASSAN continue to negotiate
contracts, and company officials have publicly stated
their confidence that negotiations will conclude
amicably. PENGASSAN issued a 21-day ultimatum on July
5, promising industrial action against the company for
failure to conclude collective bargaining.


5. COMMENT: In the past, the major oil companies
operating in Nigeria have generally avoided crude
production and lifting interruptions as a result of
disputes with the white-collar union PENGASSAN. At
times, PENGASSAN employees working at corporate
headquarters have engaged in work-to-rule actions,
which slowed administrative functions, but outright
closure of production has been rare in recent years.
The disclosure in today's newspaper the Guardian that
ExxonMobil's Managing Director Mike Fry is leaving
Nigeria may give PENGASSAN room to claim a victory, as
Fry was blamed for stalled collective bargaining
negotiations. The resumption of talks yesterday
suggests that both sides are ready to conclude this
round of contract negotiations without incident.
Nonetheless, the closure of Total's production this
last week stands as a reminder that the ongoing
struggle for greater local content and hiring in the
petroleum sector, during a trend of company
restructuring and streamlining, may have an impact on
corporate and government coffers. END COMMENT.

KRAMER