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Analysis: Strike threatens Nigerian oil

disclaimer: image is for illustration purposes only
by Carmen Gentile

Talks resumed between Chevron and Nigerian oil workers in hopes of averting a strike that would further cripple oil production in Africa's largest oil-producing country.

Workers in the PENGASSAN union -- Nigeria's largest petroleum labor group -- have called for the removal of Chevron's managing director, citing allegedly unsafe work conditions and other grievances against the third-largest energy firm in the West African country.

Talks continued Wednesday after starting earlier this month in hopes of avoiding a walkout that would effectively shut down Chevron's estimated 350,000 barrels per day production.

Labor strife has hit Nigeria's oil production hard in recent months, further impeding output already reduced by ongoing violence in the oil-rich Niger Delta.

In April grievances by workers for ExxonMobil halted 800,000 barrels a day in production. That strike ended after more than a week, costing Nigeria millions of barrels in output.

PENGASSAN's grievance with ExxonMobil became manifest in April when the union threatened to walk off the job in protest of the company's decision to fire 100 union workers.

ExxonMobil officials denied any wrongdoing, saying those employees were given generous compensation packages during the current round of restructuring.

Grievances with oil companies operating in the petroleum-rich Niger Delta are not uncommon, said Rolake Akinola, a senior analyst for West Africa at the London-based consulting firm Control Risks.

"These kind of strike threats are a sort of trend (in the Niger Delta)," Akinola told United Press International. "That's the cycle we've seen in the oil industry."

However, recent strikes, coupled with attacks on oil installations, have severely hampered production over the last few years, reducing output once estimated at 2.5 million bpd by more than 20 percent.

The setbacks recently pushed Nigeria out of the continent's top position for production, with Angola taking over the lead for the first time ever.

According to a report last week by the Organization of Petroleum Exporting Countries, Angola's production levels for the month of April reached 1.87 million barrels per day, while Nigeria's shrunk to 1.81 million bpd. That's down from its 2.5 million bpd high just three years ago.

Meanwhile, Angola's production rose by more than 800,000 bpd during the same period after several new offshore projects came online off the coast of Cabinda province.

Nigeria's steady decline in oil production has been blamed on militant groups like the Movement for the Emancipation of the Niger Delta. The delta is home to the vast majority of Nigeria's oil production; however, its residents remain mired in abject poverty.

The country that once dominated oil production in Africa has pumped more than $300 billion worth of crude over the last three decades from the southern delta states, according to estimates.

Nigeria's high unemployment in the delta, environmental degradation due to oil and gas extraction, and a lack of basic resources such as fresh water and electricity have angered the region's youth, who have taken up arms, many times supplied by political leaders, and formed militant groups and local gangs.

"Angola and Nigeria are clearly the two titans of the sub-Saharan oil world," Africa oil expert John Ghazvinian, author of "Untapped: The Scramble for Africa's Oil," told UPI.

The oil author did note that while oil production in the delta and at offshore platforms has been interrupted numerous times by militants and other armed groups, Angola's petroleum sector has remained relatively free of violent disruptions.

That's not to say Angola hasn't had its own share of difficulties with armed groups vying for its country's oil wealth.

Cabinda province, home to more than half of Angola's oil, has been the scene of violence blamed on the separatist group known as the Liberation of the Cabinda Enclave, or FLEC.

Many Cabindan separatists and members of FLEC who fled the province have returned and remain discontented with the Angolan government for not using enough of the country's oil revenue toward development.

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