US embassy cable - 05LAGOS494

C O N F I D E N T I A L SECTION 01 OF 03 LAGOS 000494 
 
SIPDIS 
 
STATE FOR AF/W 
STATE FOR CA/OCS/FROBINSON 
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 FOR PHUPER 
STATE PASS TRANSPORTATION FOR MARAD 
STATE PASS OPIC FOR CDUFFY 
STATE PASS TDA FOR BTERNET 
STATE PASS EXIM FOR JRICHTER 
STATE PASS USTR FOR ASST USTR SLISER 
STATE PASS USAID FOR GWEYNAND AND SLAWAETZ 
 
E.O. 12958: DECL: 12/08/2014 
TAGS: EPET, EINV, CASC, PGOV, ASEC, MOPS, NI 
SUBJECT: NIGERIA:AMCITS HELD ON VESSELS AS STRIKE MOVES 
INTO THIRD WEEK 
 
 
Classified By: Classified By: Consul General Brian L. Browne for Reason 
s 1.4 (D & E) 
 
Summary 
------- 
 
1.  (C)  Tidex, an American maritime firm,  is involved in a 
labor dispute with two oil unions.  Union members have taken 
control of twenty-two vessels in Rivers, Delta, and Bayelsa 
states.  Seventeen American citizens and approximately 45-50 
expatriates in total are affected by the labor action.  The 
Amcit employees are free to move about the vessel and go 
on-shore for short periods of time.  However, they are not 
permitted to leave as a group, according to Tidex officials. 
Tidex is in regular phone contact with the Amcits.  Mission 
is engaged at all levels to bring about a speedy resolution 
to this matter.  The Amcits are all reportedly in good 
condition.  There has been no serious violence.  However, 
there are reports of rough treatment (no injuries) of a few 
of the expatriates.  Union workers have also made verbal 
threats. 
 
Strike Results in Vessel Seizure, Restriction on Crew 
Movement 17 AMCITS, Other TCNs Aboard; No Violence 
--------------------------------------------- ---------- 
 
2.  (C)  On March 31, Tidewater and Tidex officials told us 
for the first time about a strike which began March 11.  They 
informed us that the strike was now more serious.  (Note: 
Tidex is the Nigerian subsidiary of Tidewater).  Tidex 
workers have staged labor actions six times in the last eight 
months.  As has been their normal procedure with regard to 
strikes, Tidex officials planned to wait out the protest, 
believing they could outlast the strikers.  Because they 
initially viewed this as a relatively minor event they did 
not notify the Mission.  However, their concern increased 
when Nigerian crew members took over several vessels.  Twelve 
boats at Onne, Rivers State have been positioned such that 
none of the boats can leave.  Four vessels have been anchored 
in Escravos, Delta State and one in Bayelsa State, near the 
AGIP oil terminal in Brass. 
 
3. (C) Seventeen Americans are on board these vessels, along 
with approximately 130 Nigerian crewmembers.  There are an 
additional approximately thirty third-country nationals on 
board the vessels, including British, Cameroonian, Honduran, 
Filipino, and other nationals.  While the expatriates, 
including the Americans, are free to move about the vessels, 
or go on-shore in small groups, they are not permitted to 
leave en masse.  Tidex management is in regular cellular 
phone contact with the Americans.  There has been no 
violence.  There are no indications of the strikers carrying 
firearms.  However, some crewmembers are growing increasingly 
nervous as the strike drags on, according to TIDEX. 
 
4. (C) Tidex MD Vaughn told us he is concerned the tone of 
the strikers is more aggressive than in past strikes.  Tidex 
management believes about 40 crew members actively support 
the strike and the rest are following along out of fear, 
intimidation, and ignorance.  Tidex has no direct contact 
with striking employees; all negotiations are being handled 
through union representatives. 
 
Tidex, Majors Suffering Millions in Losses 
------------------------------------------- 
 
5.  (C)  Tidex management's first concern is for the safety 
of their crews.  However, both Tidex and the majors are 
incurring substantial losses due to the strike.  Tidex 
indicates the strike is costing it about $110,000/day, for a 
total to date of $2 million in lost revenue and additional 
security costs.  Vaughn estimates that the company's largest 
client, ChevronTexaco, may have lost about $2.5 million. 
ExxonMobil and Shell may have also suffered similar costs. 
Vaughn indicates the boats which have been seized have a 
value of about $200 million. 
Tidex Says it is Targeted as Cabotage Act 
Triggers Lay Offs, Labor Backlash 
-------------------------------------------- 
 
6.  (SBU)  The reasons for the strike are complex, and 
include both industry and firm level disagreements.  The 2004 
Cabotage Act is driving sweeping changes in the maritime oil 
service sector.  The act restricts inland shipping to 
majority Nigerian firms.  As a result, U.S.-majority owned 
firms such as Tidex are being forced to halt direct 
operations in Nigeria.  Tidex plans to reduce its 700-plus 
employees to about 30 as a result of the Act. Tidex is 
transferring its shipping operations to a Nigerian entity, 
Tidewater Phoenix, which, in accordance with the Act, will 
contract crewmembers from a central pool of maritime workers 
engaged through independent crewing agencies.  Thus the 
redundant workers may not get re-hired. 
 
7.  (SBU) In accordance with the Cabotage Act, NUPENG and 
PENGASSAN will no longer be the unions for workers in the 
maritime area of oil servicing; Vaughn estimates the 
petroleum unions will lose about 2000 members.  Instead, 
seafarers will be members of maritime unions, and a 
government agency, JUMALIC, will oversee their assignments 
from a central registry of qualified workers.  Vaughn 
believes Tidex has been targeted by NUPENG and PENGASSAN as 
the "poster child" to resist implementation of the Cabotage 
Act.  While Tidex may be the first firm targeted by the 
petroleum unions, other maritime operators, including five 
other U.S. firms, may soon face similar circumstances. 
 
Workers Strike for End of Service Pay, Health Benefits 
--------------------------------------------- --------- 
 
8.  (C)  Tidex workers also appear to have specific 
disagreements with the firm regarding the terms of 
recently-signed collective bargaining agreement.  Tidex 
signed a new contract with NUPENG members in October, 2004, 
and with PENGASSAN members in January, 2005.  Though they 
have received no formal written demands from the unions 
outlining their grievances, Tidex management has been told 
NUPENG members were upset because they Tidex gave PENGASSAN a 
more favorable agreement.  Nevertheless, both unions are 
upset over changes in health benefits and end-of-service 
payments.  Tidex management notes the former end-of-service 
agreement created onerous financial liabilities, which the 
firm could not cover with more than 10 years of revenues. 
The end-of-service payments are now a key issue, as most 
Tidex workers face discharge, due to the Cabotage Act.  Tidex 
considers the strike in contravention of the bargaining 
agreement.  They believe they could dismiss all of the 
striking workers for cause at this point, but MD Vaughn is 
concerned about possible outbreak of violence if they were to 
do so. 
 
Mexican Stand-Off; Workers Threaten to Expand Strike 
--------------------------------------------- ------- 
 
9.  (C)  Tidex management and the workers appear to be at a 
standoff.  Tidex management, in accordance with industry 
practice, refuses to negotiate with the workers while they 
remain on strike.  Privately, Vaughn admits they would come 
to the table if the workers would leave the ships and release 
the expatriates.  He would like to begin gradually removing 
the expatriates slowly, in ones and twos, but he is concerned 
that this could enflame the situation.  He would first prefer 
to explore other avenues to resolve the situation through 
negotiation, hopefully through a trusted intermediary.  As a 
last resort, Tidex is considering asking the Nigerian Navy to 
take action to reclaim the vessels, once all expatriate crew 
members have been removed.  Tidex is planning to meet with 
the Ministers of Transport and Defense on April 5 to request 
assistance in resolving the situation.  Vaughn notes the 
unions are now threatening to take their strike nationally to 
affect other oil service companies. 
 
Mission Acting to Facilitate End to Stand-Off 
--------------------------------------------- - 
 
10.  (C)  Mission will continue to closely monitor the 
situation and will stay in close contact with Tidex 
management.  We have also begun to make contact with 
appropriate GON officials to express our concern, stress the 
need to resolve this matter expeditiously and peacefully and 
to offer our assistance and good offices as needed. 
BROWNE