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29 February 2024

Nigerian oil union threatens to shut down

By Reuters

Nigerian oil workers threatened on Wednesday to shut down output in Africa's top crude producer, deepening a national strike over a more than doubling of petrol prices.

With the government and unions locked in a showdown which has paralysed Nigeria for three days, the biggest oil union said it was ready to halt oil production, although industry officials doubted it could shut down crude exports completely.

"Now that the Federal Government has decided to be callous minded, we hereby direct all production platforms to be on red alert in preparation for total production shutdown," Babatunde Ogun, president of oil union PENGASSAN, said in a statement.
A definite decision to halt output had yet to be made, but Ogun said workers were already not sending production reports back to the government, which was "one of the very first steps in shut down process".
In response, the government urged unions to negotiate.

"The government is worried about the threat to shut down oil production because if they go ahead to carry out their threat that action will worsen our economic problem which the government is trying to solve, this is why the government is calling on labour and the civil society to come for dialogue," Labaran Maku, minister of information, told Reuters.

Nigeria exports over 2 million barrels of crude oil per day and is a major supplier to the United States and Europe. Output has been unaffected so far but concerns about Nigerian supply can move global oil prices, although they were down on Wednesday as traders worried more about the European economy.

Oil industry officials said a complete halt to oil exports was unlikely because processes were automated and some workers non-unionised. However, even a small dent in output would heap pressure on President Goodluck Jonathan's government, which relies on crude exports for 95 percent of Nigeria's foreign exchange earnings and most of its state revenue.

"If there is any disruption to oil production it would be a serious escalation and the government would be likely to use legal or enforcement means to stop it. But I think it is unlikely oil output will be affected," said Kayode Akindele, partner at Lagos-based investment firm 46 Parallels.

"The government will be fairly confident that as long as the security services can keep things under control then people will have to start going back to work. Most people don't have savings so they can't afford to lose out on days of pay."

Tens of thousands of Nigerians have gathered across the country of 160 million people in protests that have focused anger about decades of corruption and economic mismanagement.

Workers vowed to keep up the indefinite strike unless the government restored a fuel subsidy it scrapped on Jan. 1, but Jonathan's government said it would withhold pay from civil servants who join it.

Economists say the subsidy would soon have bankrupted the country. But its removal more than doubled the petrol price to 150 naira ($0.93) a litre, depriving Nigerians of what many regarded as their only welfare benefit.

At a rally in the commercial capital Lagos, protesters sang and chanted slogans urging the government to go after corrupt leaders, not state welfare.
Police shot one demonstrator when they fired on a group they accused of rioting, a Reuters reporter saw. Protests have mostly been peaceful, but deadly confrontations with police have happened in Lagos and the second largest city, Kano.

In Lagos on Wednesday, youths at flaming roadblocks tried to prevent cars moving, groups of protesters marched and waved flags and a few traders sold fruit juice or mobile phone credit, their only means of survival.

Protesters marched through the capital, Abuja, and thousands gathered in Kano, in the north.

Banks, restaurants and shops were shuttered up, evidence that the strike was already badly damaging the economy, in which most people live on less than $2 per day.

But none of the damage done so far would match a shutdown of oil exports. The strike has not affected oil output yet, industry officials say, though the offices of companies such as Shell and Exxon Mobil are shut.

The strikes risk creating shortages of basic goods.