THE WALL STREET JOURNAL: Nigerian Oil Strike Threat Only A Whimper: “Nigeria's oil unions - which once sent world oil prices soaring with the mere threat of a strike - now admit they muster at best only feeble resistance to the oil companies.” (ShellNews.net) Posted 31 March 05
By SHAI OSTER and VINCENT NWANMA
Of Dow Jones Newswires
LAGOS -- Nigeria's oil unions - which once sent world oil prices soaring with the mere threat of a strike - now admit they muster at best only feeble resistance to the oil companies.
The unions say they'll strike for three days April 11 as a warning that will cut off oil production and exports unless the government and oil companies offer better job security, stop using contract workers, and reduce the expatriate labor force. Union leaders are meeting the head of the national oil company Tuesday evening ahead of government talks Wednesday.
But the threat is undermined by the unions' diminished standing and their own admission that they've never cut crude supplies and are loathe to do so now. Many union members have already been laid off, and the government is pushing through legislation making it tougher for them to strike. Already the unions have bowed to government disinterest and pushed back their strike deadline three times.
Previous labor unrest has moved world oil markets as much as a dollar higher on fears union action could cut oil exports from Nigeria, producer of about 3% of world oil supply.
Those fears appear misplaced, with the defanged unions losing the ability to stand up to the government and the appetite for confrontation.
"The unions are becoming more a forum for political rhetoric. The government has managed to face them down, and their muscle has been cut," said Kojo Bedu-Addo, an analyst at Control Risks.
The government and oil companies have won the fight against the unions because the unions don't dare use the one ace they hold - blocking the flow of oil. Union leaders fear that a shut down would instigate a harsh crackdown and a return of the suppression seen under earlier military rule because oil is the country's main source of revenue.
"The government can be very ruthless at times. What if we shut in every export?" Brown Ogbeifun, president of Nigeria's white collar union, Pengassan, said in an interview with Dow Jones. "We will get the union leaders arrested."
Shutting in oil would dash popular support as well, forcing Nigeria's mostly poor population to spend more on fuel - and unions cannot risk losing any goodwill.
The unions' diminished status stems in part from their diminished numbers. Layoffs in the state owned Nigerian National Petroleum Corp. (NNP.YY) and the leading foreign joint venture, Shell Petroleum Development Corp., a subsidiary of Royal Dutch/Shell (RD SC) have thinned the membership roles.
With fewer members paying dues, unions have less money to pay for actions. Even before the latest redundancies, unions were stretched. Now, getting hard-to-reach oil workers to leave dozens of facilities scattered in swamps of the Niger Delta could be just too costly and time-consuming.
On top of that, the government has been trying to pass legislation that makes union membership an opt-in rather than an opt-out choice for workers. Other legislative proposals would break the monopoly of the National Labor Congress, which now speaks for all workers, giving them greater clout. The oil unions only negotiate with the Nigerian National Petroleum Corp. (NNP.YY), effectively an arm of the state, and not with the multinationals operating in the Nigeria, further weakening its bargaining power.
Parts of the law have been called excessive by observers such as the International Conference of Free Trade Unions, who say that normally reform-minded President Olusegun Obasanjo is now trying to punish the unions for thwarting parts of his economic agenda.
Last November, the unions threatened to strike if the government deregulated subsidized fuel prices, which Obasanjo said was a key to privatizing the national refinery system to end Nigeria's dependance on fuel imports. The government backed down.
On Nigeria's national political stage, unions have traditionally played an outsized role, akin to that of opposition parties, because they are one of a handful of nationwide bodies crossing ethnic, religious and regional boundaries, says Gary Busch, a consultant who has studied and worked with the oil unions.
But in a move that illustrates their diminished power, at the eleventh hour the unions extended their March 24 deadline to April 11 after companies refused to offer more guarantees on job security. Markets ignored Nigeria, focussing on developments in Iran where OPEC was meeting.
Earlier threats of labor unrest kept prices on the boil. When unions called off a strike Nov. 15 after the government acceded to demands to keep domestic fuel prices down, oil futures traded on the New York Mercantile Exchange dropped $1.62, to $45.70 a barrel.
-By Shai Oster and Vincent Nwanma, Dow Jones Newswires; +44-20-7842-9357;
Click here for ShellNews.net HOME PAGE