Nigeria Oil Shutdown ‘Last Resort’ as Strike Enters Second Week

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Bloomberg “Jan. 16 (Bloomberg) — Nigerian oil union Pengassan said it will only shut down oil output as “a last resort” in Africa’s top crude producer to give more time for negotiations with President Goodluck Jonathan’s government to end a strike now in the second week.

The Nigeria Labour Congress and the Trade Union Congress, the country’s two biggest labor federations, called the strike to protest against higher fuel prices after the government said on Jan. 1 it was ending subsidies it said cost 1.2 trillion naira ($7.4 billion) last year.

The two federations have asked Pengassan “to defer the shutting down of oil production and export,” the union said in an e-mailed statement yesterday. The “the postponement will enable labor and civil society groups explore ongoing consultations and negotiations in resolving the current nationwide strike.”

The work stoppage, which began Jan. 9, has limited trade in stocks and the naira, closed ports and banks and sparked street protests. The cost to sub-Saharan Africa’s second-biggest economy may be more than $1 billion a day, according to Gregory Kronsten, head of macroeconomic research at FBN Capital Ltd. in London.

While oil output and exports remain unaffected by the strike, Pengassan is poised “to execute immediately the systematic shutdown of oil production should the negotiation with the government break down,” the Lagos-based union said yesterday in an e-mailed statement.

Daily Output

Nigeria pumped about 2.2 million barrels of oil a day last month, according to data compiled by Bloomberg. At least 90 percent of Nigeria’s crude is produced by Royal Dutch Shell Plc, based in The Hague; Exxon Mobil Corp.; San Ramon, California- based Chevron Corp.; Total SA and Eni SpA in joint ventures with the state-owned Nigerian National Petroleum Corp.

“We’re holding the necessary consultations,” Labor Minister Chukwuemeka Wogu told reporters in Abuja yesterday. “We expect to have an agreement soon. . .”

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