Dispute With Exxon Mobil Threatens Nigeria Oil Output

Nigeria’s manager-level oil union will continue a strike indefinitely at Exxon Mobil’s local unit following a decision by the American oil major to lay off more than 80 workers, threatening output after talks with the company to end the action reached an impasse, a labor official said.

“The meetings broke down, and our action has been escalated,” Gbenga Ekundayo, vice chairman of the Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, said 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, Bloomberg reported.

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 have not 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 million barrels a day of crude and condensates, a spokeswoman for the ministry of petroleum resources said.

Exxon operates the terminal for Qua Iboe crude, which is the nation’s main export grade. Within the past year, Nigeria has struggled to sustain higher output levels due to militant attacks on pipelines.

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.