Nigeria oil union says dispute with Exxon threatens output

ABUJA (Bloomberg) -- Nigeria’s manager-level oil union will continue a strike indefinitely at Exxon Mobil Corp.’s local unit, threatening output after talks with the company to end the action reached an impasse, a labor official said.

“The meeting broke down, and as of this morning our action has been escalated,” Gbenga Ekundayo, vice chairman of the Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, said Friday by phone from Lagos. “Our people in the field have started withdrawing their services, which will automatically translate to production loss. We are pulling out completely.”

The dispute, now in its eleventh day, has been referred to an arbitration panel by the government’s minister for labor, he said.

Pengassan members at Exxon’s local unit went on strike last week, seeking the reinstatement of 83 local staff it says were wrongfully terminated. Previous threats by oil unions to curb output haven’t usually resulted in production losses. However, a similar dispute in December impacted crude loadings as union members protested against job cuts.

Nigeria, which exports the bulk of its oil, is currently producing about 2.06 MMbpd of crude and condensates, a spokeswoman for the Ministry of Petroleum Resources said by phone Friday. Exxon operates the terminal for Qua Iboe crude, which is the nation’s biggest export grade. Within the past year, Nigeria has struggled to sustain higher output levels due to militant attacks on pipelines.

'Breaking point'

The Pengassan union has “now reached a breaking point,” said Cheta Nwanze, head of research at Lagos-based risk advisory group SBM Intelligence. Unlike previous actions where strikes have had little effect on oil production, this time “there’s a real risk it will happen in the coming days.” The union may begin to withdraw members from other oil facilities in Nigeria if the dispute escalates, he said.

As recently as Thursday, the dispute seemed headed for resolution. The union said the talks fell apart in the final stages of drafting an agreement.

“We respect the rights of our workforce and will continue to engage with them to resolve this situation, but remain committed to the safety of our personnel and security of our facilities,” Exxon spokesman Todd Spitler said in an email.