OIL MAJORS SAY STRIKE UNLIKELY TO IMPACT PRODUCTION

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E.O. 12958: DECL: 09/12/2016
TAGS: EPET PGOV ELAB AA
SUBJECT: OIL MAJORS SAY STRIKE UNLIKELY TO IMPACT PRODUCTION

Classified By: CONSUL GENERAL BRIAN L. BROWNE; REASONS 1.4 (D,E)


1. (C) Summary: Top executives of oil majors predict the
strike planned for September 13 will take place. Chevron and
Shell believe their in-house unions, although they will honor
the strike, will do nothing to disrupt production. Total,
which has both production and distribution businesses in
Nigeria, is providing truckloads of oil and gasoline to
industrial customers and gas stations to minimize disruption
to the Nigerian economy. End Summary.


2. (C) Top executives of oil majors operating in Nigeria
say the strike announced by Nigeria's oil worker unions
(septel) will take place as planned, beginning midnight
Tuesday, September 12.


3. (C) Chevron Nigeria Limited, which produces
approximately 400,000 barrels per day, expects there will be
a walkout of some sort by the unions. Michael Illane,
General Manager of the Escravos facility, believes unions at
the company's Escravos facility are not planning to disrupt
production, and that facilities will continue to run with a
skeleton crew. In the area around Chevron's Lagos offices,
company managers anticipate a general strike and are planning
how best to manage the situation. The company plans to
provide transportation as a way of helping non-striking
employees get to work during the three days of the planned
strike. Illane said the company has been assured by in-house
union representation that even if employees of Shell or Total
shut down production at their companies' facilities, Chevron
employees will not follow suit. Nonetheless, the General
Manager is keeping his fingers crossed that the strike does
not take a more confrontational turn.


4. (C) Shell's Regional External Affairs Manager, Olav
Ljosne said the company does not see the strike as directed
against oil producers, but rather against the government.
The company is anticipating no reduction of production.
Nonetheless, because the unions are attempting to demonstrate
their power, the company will not be certain what will happen
until the morning of the first day of the strike. Shell,
Nigeria's largest producer, produces 600-700,000 barrels per
day for the U.S. and European markets.


5. (C) Chevron's General Manager for Government and Public
Affairs Femi Odumabo told us the government is talking with
the unions and that he believes that the unions are
listening. A meeting will take place on September 13, the
first day of the strike, which Odumabo speculates may mean
that a deal can be brokered to end the strike more quickly.


6. (C) Total, which has both production and distribution
businesses in Nigeria, is providing additional truckloads of
oil and gasoline to industrial customers and gas stations
respectively to minimize the disruption to the Nigerian
economy.


7. (C) Comment: With the strike imminent, the majors have
completed whatever preparations they could make to maintain
production. Some steps have been taken to mitigate the
inconvenience and damage to the economy that a strike may
cause. Now it is up to the unions and the government to see
if they can reach an eleventh hour meeting of the minds that
will make all of these precautions unnecessary. However,
what we have not heard are what concessions the unions are
willing to accept-- short of their ambitious demand for the
government to resolve the security problems in the Niger
Delta -- and what concessions the government may be willing
to offer to avert a strike.
BROWNE