A Review of the Nigerian Energy Industry

Nigeria’s oil union orders production shutdown from Sunday

12 January 2012, Sweetcrude, ABUJA – Nigeria’s main oil union said Thursday it would shut down output from Africa’s biggest oil producer Sunday if the government did not reverse its decision to remove fuel subsidies.

Tens of thousands of Nigerians have been protesting up and down Africa’s most populous nation for four straight days in protest against the axing of the petrol subsidy, which more than doubled the price to 141naira ($0.93) per litre.

“PENGASSAN shall be forced to go ahead and apply the bitter option of ordering the systematic shutting down of oil and gas production with effect from … 0000 hours of Sunday January 15 (2300 GMT Saturday January 14), if the federal government of Nigeria fails to yield to the popular agitation of Nigerians on her unacceptable approach to fuel subsidy removal,” the oil union said in a statement.

Industry officials doubted unions would be able to stop crude exports completely because much of production is automated and Nigeria has crude stored in reserves, but even a minor outage could have a significant impact on the economy.

Worries over Nigerian oil supplies have pushed up global oil prices.

Nigeria produces more than 2 million barrels of crude oil per day and is a key supplier to United States, Europe and Asia. Crude exports provide Africa’s second-largest economy with over 90 percent of foreign exchange revenues.

“If there is any disruption to oil production it would be a serious escalation and the government would be likely to use legal or enforcement means to stop it,” said Kayode Akindele, partner at Lagos-based investment firm 46 Parallels.

Container shipping group Maersk Line said it was unable to bring its vessels carrying consumer goods and foodstuffs into Nigeria’s ports as a fourth day of nationwide strikes brought terminals to a standstill.

Protests were ongoing in cities everywhere from the commercial centre Lagos in the south to the remote and restive city of Maiduguri in the far northeast.

In Lagos, tens of thousands gathered in Gani Fawehinmi Freedom Park, where women selling drinks and Afrobeat music pumping out of loud speakers gave the protest a carnival atmosphere. Many chanted anti-government slogans.

A group of demonstrators beat drums and slapped an effigy of President Goodluck Jonathan across the face with leafy branches.

“Our leaders have betrayed us too many times and this is the last time. They only care about themselves, not the common people,” said Olu Shittu, expressing widely held view Nigeria’s elite are too busy lining their own pockets to be moved by the plight of the poor.

“We’re staying here until they put the subsidy back.”

Jonathan’s spokesman told Reuters Thursday the government was open to negotiations and dialogue was taking place between lawmakers, labour unions and the presidency.

President Jonathan has shown no sign of backing down on his government’s decision to scrap a subsidy economists say was wasteful and corrupt.

Publicly unions have said they will only stop strikes if the government returns petrol prices to the pre-subsidy removal rate of 65 naira and the government has said it will not back down on its decision to scrap subsisides from January 1.

The national assembly has already urged the government and unions to back down but without success.


“The senate has met with labour unions at least twice and the senate met with the president at a breakfast meeting this morning,” Reuben Abati, presidential spokesman, told Reuters at the presidential villa in Abuja.

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