STRIKE UPDATE - FOR CLEARANCE

C O N F I D E N T I A L SECTION 01 OF 03 LAGOS 002270

SIPDIS

OFFICIAL INFORMAL

E.O. 12958: DECL: 11/10/2009
TAGS: ELAB EPET ASEC NI
SUBJECT: STRIKE UPDATE - FOR CLEARANCE

REF: ABUJA 01837 AND PREVIOUS

Classified By: Consul General Brian L. Browne for Reasons 1.5 (B & D)

SUMMARY
--------------


1. (C) The Nigeria Labor Congress (NLC) and allied civic
organizations continue to lay the groundwork for a November
16 nationwide strike. NLC President Adams Oshiomhole has
threatened that the strike will be indefinite and targeted to
affect oil production and export. Over the years, many oil
and gas workers affiliated with unions NUPENG and PENGASSEN
have observed strikes, but have generally allowed essential
workers to report for duty in order to shield production from
disruption during a strike. Oil majors have contingency
plans in place and say they are prepared to weather the
strike -- for a while. However, if the strike lasts a
considerable period and the NLC is succeeds in getting the
unions to keep essential workers at home, then the strike
will take the unprecedented step of affecting oil production.
End Summary

NLC Lays Groundwork With November 3 Lagos Rally
-------------- --


2. (U) On November 3, the NLC and civil society groups
organized a rally in Lagos as part of their mobilization
campaign for the scheduled November 16 nation wide strike.
The event is the first in the series of rallies planned by
the coalition to boost compliance with the strike. Thousands
of workers and ordinary Nigerians joined the procession. In
his address to the crowd, Oshiomhole asserted the strike
would be indefinite and would be targeted to affect oil
production and export. The rally ended abruptly but
peacefully, when Lagos police insisted that the organizers
had no legal permit to organize the event.


3. (U) (Note: Last week the NLC withdrew from the
"palliative committee" established by the GON. The
committee's mandate was to recommend relief measures that
would cushion the impact of the fuel price increase. The NLC
objected that reviewing the propriety of the fuel price hike
itself should have been part of the committee's mandate. In
apparent reaction to the NLC's criticism, the GON announced
November 4 that it was adding the issue of petroleum product
pricing to the committee's agenda. The NLC has since
announced that it is re-joining the palliative committee.
End Note.)

GON Attempts to Avoid Strike
--------------


4. (U) The GON is seeking court action to prevent the
strike. The Court of Appeals is scheduled to hear the case
on 11 November. The Ministry of Labor has announced that
public sector workers participating in the strike will not be
paid.

GON, NLC, and Oil and Gas Union Relations
--------------


5. (U) Oil and gas sector workers are members of two
unions: the National Union of Petroleum and Natural Gas
Workers (NUPENG),and the Petroleum and Natural Gas Senior
Staff Association (PENGASSEN),and are affiliated with the
NLC through the Trade Union Congress (TUC). NUPENG is the
union for more junior workers in the oil and gas sector,
while senior and white-collar workers are members of
PENGASSEN. Since the early 1990s, Nigeria's oil and gas
exports have not/not been affected significantly by
industrial action. While NUPENG and PENGASSEN workers
generally have observed strikes, they have allowed sufficient
number of their members to work so that production never
suffered materially during previous strikes.

Oil Unions Plan to Participate in Strike
--------------


6. (C) The two oil and gas sector unions met on November 9,
and have announced that they will participate in the strike.
Prior to this announcement, PENGASSAN's Secretary, Michael
Fadakinte told PolSpec that his union will participate in the
strike as directed by the Trade Union Congress, but may not
be willing to stop crude oil export. In press reports on
November 4, the Deputy President of PENGASSEN stated that
PENGASSEN intended to maintain essential services "until it
becomes absolutely necessary to do otherwise."

Chevron Texaco: PENGASSEN Key to Nigeria's Production
-------------- --------------


7. (C) Chevron Texaco Environmental, Health, and Safety
Manager Robnett reported that NUPENG and PENGASSEN typically
wait until the last minute to decide whether to join a
national strike. Robnett expects jockeying and brinksmanship
to continue until the strike begins. She noted that the
unions often hold discussions separate from the NLC with the
federal government, using the threat of a production shutdown
as a bargaining chip for gains in other areas. Robnett
confirmed that in the past, the oilfields have not shut down
unless PENGASSEN agreed to strike. In many cases, NUPENG has
declared its support for a strike, but the workers in the
fields continue to work.

Exxon Mobil: Focused on Contingency Plans
--------------


8. (C) Exxon Mobil External and Government Relation
contacts indicated it was directing most of its efforts
toward contingency planning in the event of a strike.

Shell: NLC Wants Strike to Bite
--------------


9. (C) Shell reported that its union staff has often joined
in national strikes, but workers have tended to shield
production during such events. However, the Shell External
Relations Director indicated that the NLC wants this strike
to "bite," and so may require the unions to "deliver on
production." Shell has a contingency plan to continue with
production "for some time" in the event of a full work
stoppage. During past strikes, Shell has been able to
maintain production for more than two and a half weeks. As
reported reftel, Shell is seeking a court injunction to
prevent its workers from joining the November 16 strike. The
judge has adjourned the case until November 18; a success, at
least temporarily, for labor, as it allows labor to launch
the strike on November 16.


10. (SBU) (Comment: Shell is currently in the midst of a
dispute with unions over re-structuring and terminating of
some workers. The unions have not been happy with severance
packages offered to workers soon to be laid off; the unions
led a two-day strike at Shell in recent weeks. While the
restructuring clash within Shell is separate from the NLC-led
fuel dispute, Shell workers may join the NLC strike to gain
an additional platform to voice discontent over
restructuring. End Comment).

Halliburton: Echoes PENGASSEN Role is Key
--------------


11. (C) A representative from oil service company
Halliburton stated that the strike would hold. Halliburton
employees are both NUPENG and PENGASSEN members, who, in the
past, have followed instructions from their national unions
to join or sit out national strikes. The Halliburton
representative remarked the level of PENGASSEN's
participation would determine the impact on the upstream
sector.

Seabulk: Export Maritime Operations will Continue
-------------- --------------


12. (C) Oil Service company and marine transport firm
Seabulk forecasted there may be an impact on production,
particularly on-shore, but that the effect would not be dire.
Companies more reliant on on-shore operations, (principally
Shell, through its SPDC unit),will be hit hardest, as will
companies with more Nigerian employees (Shell, AGIP).
Seabulk management indicated full stoppage of maritime
activities generally does not occur during national strikes.
Maritime employees with Seabulk currently belong to NUPENG
and PENGASSEN, but have not participated in past strikes.
Export tankers are crewed largely by expatriates, and are
generally not affected by strikes. However, mooring, static
tow, and other smaller work boats crewed by Nigerians could
be affected by a strike. If Nigerian crews were not
available to carry out crew changes and re-supply of crews in
the field, this might also eventually impact production. In
general, the maritime sector is more labor intensive than the
energy sector, and more workers are required "on deck" to
ensure the functioning of the vessels and cargo transport.
In the unlikely event of Seabulk striking, management has
indicated that it would attempt to bring in third country
nationals to temporarily fill positions.

Comment
--------------


13. (C) Most of our energy contacts indicated that once a
production crew is in place in the field (typically working
one to two week rotations),they will continue working
regardless of a strike. If history is an accurate guide,
even if the strike is generally honored, we can expect
production to continue normally for a few weeks.


14. (C) We will be in uncharted territory if strike is 100%
successful with NUPENG, and more importantly, PENGASSEN
employees, fully respecting the call to stay at home.
Production could also be negatively affected if the strike
last for more than three weeks. A few points are clear:
on-shore production will be affected more quickly than
off-shore production, with Shell and AGIP being the most
vulnerable due to their high levels of on-shore production
and large numbers of Nigerian employees. Exxon Mobil, with
all production off-shore, is likely to be the least impacted.


15. (U) This cable has been cleared by Embassy Abuja.

BROWNE