US embassy cable - 04LAGOS2273

UNCLAS SECTION 01 OF 03 LAGOS 002273 
 
SIPDIS 
 
SENSITIVE BUT UNCLASSIFIED - HANDLE ACCORDINGLY 
 
STATE FOR AF/W 
STATE FOR EB/ESC/IEC/ENR/BLEVINE 
STATE FOR DS/IP/AF 
STAT FOR INR/AA 
STATE PASS DOE FOR DAS JBRODMAN AND CGAY 
STATE PASS TREASURY FOR ASEVERENS AND SRENENDER 
STATE PASS DOC PHUPER 
STATE PASS TRANSPORTATION FOR MARAD 
 
E.O. 12958: N/A 
TAGS: EPET, EINV, PGOV, ASEC, NI 
SUBJECT: LOOKING TOWARD THE NOVEMBER 16 STRIKE 
 
REF: ABUJA 01837 AND OTHERS 
 
 SUMMARY 
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1.  (SBU)  The Nigeria Labor Congress (NLC) and allied civic 
organizations continue to lay the groundwork for a November 
16 nationwide strike.  NLC President Adams Oshiomhole has 
threatened that the strike will be indefinite and targeted to 
affect oil production and export.  Over the years, many oil 
and gas workers affiliated with unions NUPENG and PENGASSEN 
have observed strikes, but have generally allowed essential 
workers to report for duty in order to shield production from 
disruption during a strike.  Oil majors have contingency 
plans in place and say they are prepared to weather the 
strike -- for a while.  However, if the strike lasts a 
considerable period and the NLC is succeeds in getting the 
unions to keep essential workers at home, then the strike 
will take the unprecedented step of affecting oil production. 
 End Summary 
 
NLC Lays Groundwork With November 3 Lagos Rally 
--------------------------------------------- -- 
 
2. (SBU)  On November 3, the NLC and civil society groups 
organized a rally in Lagos as part of their mobilization 
campaign for the scheduled November 16 nation wide strike. 
The event is the first in the series of rallies planned by 
the coalition to boost compliance with the strike. Thousands 
of workers and ordinary Nigerians joined the procession.  In 
his address to the crowd, Oshiomhole asserted the strike 
would be indefinite and would be targeted to affect oil 
production and export. The rally ended abruptly but 
peacefully, when Lagos police insisted that the organizers 
had no legal permit to organize the event. 
 
3.  (SBU)  (Note:  Last week the NLC withdrew from the 
stakeholders committee established by the GON.  The 
committee's mandate was to recommend relief measures that 
would cushion the impact of the fuel price increase.  The NLC 
objected that reviewing the propriety of the fuel price hike 
itself should have been part of the committee's mandate.  In 
apparent reaction to the NLC's criticism, the GON announced 
November 4 that it was adding the issue of petroleum product 
pricing to the committee's agenda.  The NLC has since 
announced that it is re-joining the committee.  End Note.) 
 
GON, NLC, and Oil and Gas Union Relations 
------------------------------------------- 
 
4.  (U)  Oil and gas sector workers are members of two 
unions: the National Union of Petroleum and Natural Gas 
Workers (NUPENG), and the Petroleum and Natural Gas Senior 
Staff Association (PENGASSEN).  NUPENG is the union for 
laborers in the oil and gas sector, while senior and 
white-collar workers are members of PENGASSEN.  Since the 
early 1990s, Nigeria's oil and gas exports have not/not been 
affected significantly by industrial action.  While NUPENG 
and PENGASSEN workers generally have observed strikes, they 
have allowed sufficient number of their members to work so 
that production never suffered materially during previous 
strikes. 
 
Oil Unions Plan to Participate in Strike 
------------------------------------------ 
 
5. (SBU)  The two oil and gas sector unions met on November 
9, and have announced that they will participate in the 
strike.  Prior to this announcement, PENGASSAN's Secretary, 
Michael Fadakinte told PolSpec that his union will 
participate in the strike as directed by the Trade Union 
Congress, but may not be willing to stop crude oil export. In 
press reports on November 4, the Deputy President of 
PENGASSEN stated that PENGASSEN intended to maintain 
essential services "until it becomes absolutely necessary to 
do otherwise." 
Chevron Texaco: PENGASSEN Key to Nigeria's Production 
--------------------------------------------- --------- 
 
6.  (SBU)  Chevron Texaco Environmental, Health, and Safety 
Manager Robnett reported that NUPENG and PENGASSEN typically 
wait until the last minute to decide whether to join a 
national strike.  Robnett expects jockeying and brinksmanship 
to continue until the strike begins.  She noted that the 
unions often hold discussions separate from the NLC with the 
federal government, using the threat of a production shutdown 
as a bargaining chip for gains in other areas.  Robnett 
confirmed that in the past, the oilfields have not shut down 
unless PENGASSEN agreed to strike.  In many cases, NUPENG has 
declared its support for a strike, but the workers in the 
fields continue to work. 
 
Exxon Mobil: Focused on Contingency Plans 
------------------------------------------- 
 
7.  (SBU)  Exxon Mobil External and Government Relation 
Director indicated it was directing most of its efforts 
toward contingency planning in the event of a strike. 
 
Shell: NLC Wants Strike to Bite 
------------------------------- 
 
8.  (SBU)  Shell reported that its union staff has often 
joined in national strikes, but workers have tended to shield 
production during such events.  However, the Shell External 
Relations Director indicated that the NLC wants this strike 
to "bite," and so may require the unions to "deliver on 
production."  Shell has a contingency plan to continue with 
production "for some time" in the event of a full work 
stoppage.  During past strikes, Shell has been able to 
maintain production for more than two and a half weeks.  As 
reported reftel, Shell is seeking a court injunction to 
prevent its workers from joining the November 16 strike.  The 
judge has adjourned the case until November 18; a success, at 
least temporarily, for labor, as it allows labor to launch 
the strike on November 16. 
 
9.  (SBU)  (Comment:  Shell is currently in the midst of a 
dispute with unions over re-structuring and terminating of 
some workers.  The unions have not been happy with severance 
packages offered to workers soon to be laid off; the unions 
led a two-day strike at Shell in recent weeks.  While the 
restructuring clash within Shell is separate from the NLC-led 
fuel dispute, Shell workers may join the NLC strike to gain 
an additional platform to voice discontent over 
restructuring.  End Comment). 
 
Halliburton: Echoes PENGASSEN Role is Key 
----------------------------------------- 
 
10.  (SBU)  A representative from oil service company 
Halliburton stated that the strike would hold.  Halliburton 
employees are both NUPENG and PENGASSEN members, who, in the 
past, have followed instructions from their national unions 
to join or sit out national strikes.  The Halliburton 
representative remarked the level of PENGASSEN's 
participation would determine the impact on the upstream 
sector. 
 
Seabulk: Export Maritime Operations will Continue 
--------------------------------------------- ----- 
 
11.  (SBU)  Oil Service company and marine transport firm 
Seabulk forecasted there may be an impact on production, 
particularly on-shore, but that the effect would not be dire. 
 Companies more reliant on on-shore operations, (principally 
Shell, through its SPDC unit), will be hit hardest, as will 
companies with more Nigerian employees (Shell, AGIP). 
Seabulk management indicated full stoppage of maritime 
activities generally does not occur during national strikes. 
Maritime employees with Seabulk currently belong to NUPENG 
and PENGASSEN, but have not participated in past strikes. 
Export tankers are crewed largely by expatriates, and are 
generally not affected by strikes.  However, mooring, static 
tow, and other smaller work boats crewed by Nigerians could 
be affected by a strike.  If Nigerian crews were not 
available to carry out crew changes and re-supply of crews in 
the field, this might also eventually impact production.  In 
general, the maritime sector is more labor intensive than the 
energy sector, and more workers are required "on deck" to 
ensure the functioning of the vessels and cargo transport. 
In the unlikely event of Seabulk striking, management has 
indicated that it would attempt to bring in third country 
nationals to temporarily fill positions. 
 
Comment 
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12.  (SBU) Most of our energy contacts indicated that once a 
production crew is in place in the field (typically working 
one to two week rotations), they will continue working 
regardless of a strike.  If history is an accurate guide, 
even if the strike is generally honored, we can expect 
production to continue normally for a few weeks. 
 
13.  (SBU) We will be in uncharted territory if strike is 
100% successful with NUPENG, and more importantly, PENGASSEN 
employees fully respecting the call to stay at home. 
Production could also be negatively affected if the strike 
last for more than three weeks.  A few points are clear: 
on-shore production will be affected more quickly than 
off-shore production, with Shell and AGIP being the most 
vulnerable due to their high levels of on-shore production 
and large numbers of Nigerian employees.  Exxon Mobil, with 
all production off-shore, is likely to be the least impacted. 
 
14. (U)  This cable has been cleared by Embassy Abuja. 
BROWNE