Nigeria’s oil unions threaten to stop output

NIGERIA’S two main oil unions threatened to shut output in Africa’s top crude producer as a national strike entered its fourth day, mounting pressure on President Goodluck Jonathan to restore fuel subsidies.

The Nupeng union said it has withdrawn its workers from oil fields, while the other, Pengassan, said yesterday it told its 24,000 members to “be on red alert” in preparation for a shutdown of fields operated by companies such as Royal Dutch Shell. The strike has limited trade in stocks and the naira, Nigeria’s currency, and closed ports and bank branches.

“If there’s a prolonged shutdown of oil exports, that would put tremendous pressure on the government,” Antony Goldman, head of PM Consulting, said. In the short term, “companies producing off floating production storage and offloading vessels can probably increase production” to offset initial losses, he said.

Mr Jonathan, who was elected in April, has pledged to use savings from the 1.2 trillion naira (€5.8 billion) subsidy to invest in power plants and roads in sub-Saharan Africa’s second-largest economy.

At the same time he faces an increase in religious violence in parts of the north where he has declared a state of emergency and says Islamist militants pose a worse threat to the country than the 1967-70 civil war.

More than 85 people have died in bomb and gun attacks since Christmas Day on churches in Abuja, the capital, and in the north that the authorities blame on Boko Haram. Its leader, Abubakar Shekau, in a 15-minute video posted on YouTube, claimed responsibility for recent attacks and said the group will target Christians in the north if they don’t heed its warning to leave.

“The strike and the security situation leave Nigeria at a crossroads,” Mr Goldman said. “Whether things will get better or worse will be resolved in the next few weeks. The status quo looks increasingly unsustainable.”

Oil accounts for about 80% of state revenue and more than 95% of export income, according to the Finance Ministry. Nigeria produced about 2.2 million barrels of oil a day last month.

At least 90% of Nigeria’s crude is pumped by Shell, Exxon Mobil, San Ramon, Chevron, Total and Eni in joint ventures with the state-owned Nigerian National Petroleum Corporation.

Crude for February delivery gained as much as $1.29 to $102.16 a barrel on the New York Mercantile Exchange in London yesterday.

Petrol prices in Nigeria, where two-thirds of the population of about 164 million live on less than €1 a day, more than doubled after the subsidy ended. The price had been capped at 65 naira a litre, undermining investment in refineries that forced the country to import about 70% of its fuel.

— Bloomberg