US embassy cable - 04LAGOS1383

UNCLAS LAGOS 001383 
 
SIPDIS 
 
STATE PASS TO EXIM, OPIC AND TDA 
LONDON AND PARIS PASS TO AFRICA WATCHERS 
KABUL PASS TO SROSS 
DIA/J2 PASS TO GHAYES 
 
E.O. 12958: N/A 
TAGS: EPET, EINV, ELAB, PGOV, ECON, NI 
SUBJECT: Nigerian Crude Not Yet Flowing from Total - 
Other Union Actions Pending 
 
1. Contrary to media reports that an agreement between 
the French oil company Total and Nigeria's white-collar 
oil workers union PENGASSAN has been reached allowing 
for immediate resumption of the company's crude oil 
production, O.B. Haffner, Corporate Affairs Manager for 
Total Nigeria, told ECONOFF on Thursday morning, July 
8, that there is no final agreement between the parties 
and that production has not resumed.  He suggested 
negotiations are ongoing and may be close to 
resolution, and said he would have a clearer indication 
of their progress and possibly a timetable for 
restarting production by 3:00 p.m. local time on July 
8. 
 
2. On Wednesday evening, July 7, Haffner reiterated the 
company's public statements that oil production was 
halted as a precautionary measure due to a "degraded 
safety situation" resulting from a union dispute over 
perceived inequities involving expatriate versus 
Nigerian hiring for high-skill jobs.  Haffner told 
Econoff Wednesday morning that the company expected to 
be pumping crude again by the end of the weekend or 
early next week. 
 
OTHER PENDING UNION ACTIONS 
 
3. Meanwhile, the umbrella union organization Nigeria 
Labour Congress (NLC) publicly softened its position on 
a threatened industrial action over the state of the 
nation's refineries after what were deemed fruitful 
discussions between the NLC and GON officials regarding 
pension reform.  But simultaneously, the NLC issued new 
strike warnings in conjunction with fuel prices.  NLC 
representatives were quoted as saying prices have risen 
contrary to a court ruling of mid-June that resolved a 
two-day nationwide strike over the consumer price of 
gasoline. 
 
4. ExxonMobil and PENGASSAN continue to negotiate 
contracts, and company officials have publicly stated 
their confidence that negotiations will conclude 
amicably.  PENGASSAN issued a 21-day ultimatum on July 
5, promising industrial action against the company for 
failure to conclude collective bargaining. 
 
5. COMMENT: In the past, the major oil companies 
operating in Nigeria have generally avoided crude 
production and lifting interruptions as a result of 
disputes with the white-collar union PENGASSAN.  At 
times, PENGASSAN employees working at corporate 
headquarters have engaged in work-to-rule actions, 
which slowed administrative functions, but outright 
closure of production has been rare in recent years. 
The disclosure in today's newspaper the Guardian that 
ExxonMobil's Managing Director Mike Fry is leaving 
Nigeria may give PENGASSAN room to claim a victory, as 
Fry was blamed for stalled collective bargaining 
negotiations.  The resumption of talks yesterday 
suggests that both sides are ready to conclude this 
round of contract negotiations without incident. 
Nonetheless, the closure of Total's production this 
last week stands as a reminder that the ongoing 
struggle for greater local content and hiring in the 
petroleum sector, during a trend of company 
restructuring and streamlining, may have an impact on 
corporate and government coffers. END COMMENT. 
 
KRAMER