Total shuts down oil, gas production in Nigeria in face of strike threats
Energy giant Total has shut down oil and gas production in Nigeria in the face of a threatened labor strike that raised management fears that there could be violence, the company said Tuesday.
Elf Nigeria, a subsidiary of Franco-Belgian-owned Total, stopped production of the 235,000 barrels of oil and 187 million cubic feet of natural gas it normally produces each day, the company's Nigeria spokesman told The Associated Press from the capital of Abuja.
The shutdown accounts for roughly 10 percent of Nigeria's total production of 2.5 million barrels a day.
The company had informed clients that it was unable to meet obligations for deliveries of oil and gas exports from Nigeria, said Patricia Marie, a spokeswoman for parent company Total.
Nigeria is the world's seventh-largest exporter and the fifth-biggest source of U.S. oil imports. It is Africa's largest oil exporter.
Production cuts in Nigeria and Iraq, along with fears of shutdowns in Russia, forced light crude for August delivery up 87 cents to $39.26 a barrel during Tuesday morning trade on the New York Mercantile Exchange.
In Nigeria, the unusual, precautionary shutdown began Friday to prevent violence or sabotage, Elf Nigeria said.
The firm tried to restart production on Monday but was forced to abandon the effort Tuesday morning after union leaders ordered it be stopped, said Marie, the Total spokeswoman.
There was still no crude oil production by Tuesday evening, company officials said.
Meetings on Tuesday between management, labor and government failed to end the impasse, Elf Nigeria said. The talks were held in the oil city of Port Harcourt and were expected to resume Wednesday.
Company workers from Nigeria's two major oil unions had threatened last week to go on strike unless the company grants demands that local workers receive conditions and pay comparable to those of expatriate Europeans and Americans, said Elijah Okougboh, deputy secretary general of the National Union of Petroleum and Natural Gas workers, or Nupeng.
Nigeria faces growing labor unrest in its oil sector, with several major strikes threatened later this month.
The Nigerian subsidiary of ExxonMobil announced Tuesday its workers had issued an order to strictly follow work rules following "disagreements over some of the issues under negotiation." Production was not affected by the development, the subsidiary Mobil Producing Nigeria said in a communique.
The ultimatum came after workers demanded a review of employee compensation and benefits, the company said without elaborating.
ExxonMobil is the second-largest company in Nigeria, producing 600,000 barrels of oil a day.
Workers of the state-owned Nigeria National Petroleum Corporation, unhappy over pensions, are also threatening to walk off their jobs. Energy workers upset by plans to privatize refineries also are threatening a nationwide strike.
Nigeria's oil industry is plagued by attacks by criminal gangs and activists trying to extort company payoffs. In May 2003, 97 expatriates and 170 Nigerians were held captive during a weeks-long protest by some Nigerian staff.
Political and ethnic violence has also disrupted crude oil production in the restive Niger Delta, where U.S.-owned ChevronTexaco has been forced to cut production of 144,000 barrels a day since March last year.
The U.S. Department of Energy estimates West Africa's Gulf of Guinea holds up to 10 percent of the world's oil reserves.
The United States, Europe and Asia increasingly are looking to West Africa as one alternative to oil from the politically volatile Middle East.
Sadiq Waziri, a Lagos-based oil analyst for Nigeria's Lead Bank, said markets were "trading on nervousness," and should take into account that oil unions in Nigeria only rarely carry out strike threats.
"There has never been stability in the Nigerian oil industry ... It is something the global oil market should factor in by now," Waziri said.
What do you think? Leave a comment below. See our commenting guidelines.
Sign up for regular Resilience bulletins direct to your email.