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Nigeria oil workers’ strike threatens to disrupt supply

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One of Nigeria’s most powerful oil unions launched a strike on Monday to protest unfair labour practices at a local energy exploration company, raising the prospect of disruption to supplies of crude and refined products.

Members of the union, mainly managers in the exploration and production sector, went on strike after talks with the government in recent days ended in stalemate, but a new round of discussions are ongoing to end the nationwide industrial action.

Although there were no immediate signs that crude production had taken a hit, analysts said the strike could impact Nigeria’s exports of crude, revenues from which make up the backbone of the country’s economy.

Nigeria’s crude production, which stands at just under 1.8m barrels a day, has been volatile over the last couple of years as militant attacks and industrial action caused major disruptions.

In late 2016, a Pengassan-coordinated strike by ExxonMobil employees cut off 550,00 b/d of light and medium sweet crude loadings for around a week, said Energy Aspects analysts.

“This time around, the potential impact is much greater, however, since Pengassan has called all of its members, covering over 100 oil companies operating in Nigeria, to heed the call to strike,” said Energy Aspects.

While last year’s strike was spurred by company cost-cutting, the recent unrest has been prompted by the ability of domestic oil companies to hire and fire employees at their discretion.

Any loading terminal disruption would exacerbate last week’s Forties pipeline outage, the North Sea crude stream that underpins the Brent crude price.

On Monday, Brent – the international benchmark – rose 0.7 to $63.66 a barrel.

“This should preclude any fall in the Brent price for the foreseeable future,” said Carsten Fritsch at Commerzbank.

Nigeria’s state oil company, the Nigerian National Petroleum Corporation (NNPC), urged motorists to not panic buy fuel as worries of shortages led people to queues at petrol pumps.

“There are enough petroleum products to keep the nation wet,” said NNPC.

“NNPC wishes to state that relevant government agencies are in consultation with industry unions to arrive at an amicable resolution of issues over which there are threats of industrial action,” NNPC said.

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Ihesiulo Grace

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