WILLBROS PLANS TO LEAVE NIGERIA, LABOR DISPUTE

C O N F I D E N T I A L SECTION 01 OF 02 LAGOS 000073

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E.O. 12958: DECL: 01/26/2017
TAGS: EPET ELAB ASEC PTER CASC NI
SUBJECT: WILLBROS PLANS TO LEAVE NIGERIA, LABOR DISPUTE
CONTINUES

REF: A. LAGOS '06 1276

B. LAGOS '06 1358

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Classified By: Consul General Brian Browne for Reasons 1.4 (B,D)


1. (C) Summary: Due to myriad challenges, ranging from labor
difficulties to diminution of business caused by militant
activity in the Delta, U.S. oil service contractor Willbros
plans to exit Nigeria by March. The company executives hope
to sell its Nigerian subsidiary to Ascot Drilling. The
Economic and Financial Crimes Commission (EFCC) has asked to
see company executives but have not stated why or provided a
date certain for the interview. Attrition of workers support
for protracted labor strike has enabled Willbros to resume
truncated operations at its troubled Choba I site. End
Summary.

WILLBROS EXIT STRATEGY: SALE TO ASCOT
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2. (C) On January 24 Willbros corporate counsel Jeff Faludi
told the Consul General Willbros is negotiating the company's
sale to Ascot Drilling, a Nigerian company, and hopes to
consummate the deal by March. Two other Nigerian buyers are
interested and Willbros will look to them should Ascot be
unable to provide the necessary financing to buy the company,
Faludi said. Instead of the normal transitional period built
into buy-out agreements in the oil service industry, Willbros
plans to turn everything over to the buyer the day the
contract is signed. By taking this approach, Willbros sought
to avoid being in the gray area where they still maintained
some degree of legal ownership although the concern was being
increasingly managed by a foreign firm not constrained by the
dictates of U.S. corporate law. After its recent legal woes
in the states, the last thing Willbros needed was to face
potential legal problems in the U.S. because of the acts of
the purchaser, Faludi stressed.


3. (C) Faludi added the Economic and Financial Crimes
Commission (EFCC) has asked to meet them but has not given a
date nor reason for the meeting. Faludi mentioned a few GON
officials and some private Nigerians, who know Willbros is
attempting to pull out, have attempted to extract "special
fees" from the company. He suspected the EFCC overture might
be of the same genre. Willbros agreed to notify us if the
EFCC did finally schedule a meeting.

WILLBROS IN NEGOTIATIONS TO RESOLVE LABOR DISPUTE
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4. (C) According to Faludi, in mid-December Willbros met
both national and local members of the National Union of
Petroleum and Natural Gas Workers (NUPENG) to discuss
amending a May 2006 collective bargaining agreement the
company claimed would bankrupt it. (Ref A) However, NUPENG
local members basically scuttled the meeting by serving
Willbros with notice of a lawsuit against Willbros for
non-performance of the collective bargaining agreement. The
NUPENG national organization, embarrassed by the local's
action, immediately canceled the national organization's fuel
embargo against Willbros. Willbros then fired the local
members responsible for the lawsuit. Meanwhile, the strike
action against Willbros is attenuating. Many of the workers
have returned; those who have not are not getting paid. The
reduced work force and lower labor costs suits the company
just fine. Due to militant unrest in the Delta, work projects
have dwindled. Thus Willbros does not need the normal
complement of workers. Ironically, the strike has turned
into a cost savings blessing, Faludi stated. Consequently,

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Willbros is not in a big hurry to end the labor dispute. They
would prefer the status quo until they have consummated the
sale of the company.


5. (C) Regarding the sale, Willbros will retain the
contracts and the goodwill associated with the name and the
buyer will be allowed to use the Willbros name for two years.
Also, the buyer will retain a small cadre of expatriate
technicians to help with the specialized work for which the
local work force is not adequately trained.

COMMENT
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6. (C) Although it has faced challenges unique to it,
Willbros also has faced many challenges that are universal in
the oil service sector. Work had been reduced, profits
squeezed and insecurity is a growing concern. While we do not
know of any other oil service companies pulling up stakes,
many companies are streamlining operations to fit this tough
new environment. Should the level of insecurity and of work
remain as is for the indefinite future, other companies might
begin to follow Willbros's lead. End comment.
BROWNE