Nigeria Oil shutdown

Union threatens oil production shutdown in Nigeria
LAGOS, Nigeria, Thu Jan 12, 05:46 PM

Click To Enlarge [/t][/t] [/t] An man protest with a placard saying ' President Jonathan should go or die like Gadafi' on the removal of a fuel subsidy... More A major union threatened Thursday to stop the beating heart of Nigeria's economy - crude oil production - as part of a nationwide strike and protests gripping Africa's most populous nation. World oil prices climbed on the news. Nigeria is the fifth-largest oil exporter to the U.S., and a shutdown would force American refineries to replace 630,000 barrels per day of crude. The union's ability to enforce a shutdown, beginning Sunday, across the swamps of Nigeria's southern delta to its massive offshore oil fields, remains in question. But the threat of a strike caused jitters on global oil markets as traders worldwide worried about supply. Nigeria has been paralyzed by a strike that began Monday after President Goodluck Jonathan's government abandoned subsidies that kept gasoline prices low. Overnight, prices at the pump more than doubled, from $1.70 per gallon (45 cents per liter) to at least $3.50 per gallon (94 cents per liter). The costs of food and transportation also doubled in a nation where most people live on less than $2 a day. Anger over losing one of the few benefits average Nigerians see from being an oil-rich country, as well as disgust over government corruption, have led to demonstrations across this nation of 160 million people and violence that has killed at least 10 people.

The Petroleum and Natural Gas Senior Staff Association of Nigeria, which represents about 20,000 workers, said it would be forced to "apply the bitter option" of closing down all oil and gas production if the government refused to reinstate the gasoline subsidies.
Union president Babatunde Ogun said if fields are shut down, it could take six months to a year to restart them.
"We ... believe that if everything comes to a standstill, the government will budge," Ogun told reporters in Lagos. Petrol dollars dominate Nigeria's economy and represent the majority of its government revenues.
Ogun also said a natural gas shutdown would turn off the nation's power grid, which is already in shambles.
Negotiations between labor and the government ended Thursday night without any announcement. Officials said they would resume Saturday.
So far, Nigeria's oil industry hasn't felt the effects of the national strike. Many of its operations are automated, both for efficiency and to avoid having staff work in the Niger Delta's maze of creeks, where criminal gangs and militants target workers for high-dollar kidnappings.
Foreign companies also run large offshore fields, far from the chaos of growing demonstrations across the country. Shipments from offshore platforms move immediately to market.
But if something breaks, if the pressure in the wells fluctuate, or if countless other problems occur that cause an automatic system shutdown, there wouldn't be anyone there to get production running again.
When pressed about how the threatened shutdown could affect the automated parts of the industry, Ogun did not offer an answer.
Most oil firms, including the dominant Royal Dutch Shell PLC, say they are monitoring the situation.
Kenneth Arnold, an independent petroleum consultant and former Shell engineer, said it "would be very easy to shut down" Nigeria's oil fields. Bringing in replacement workers to run the fields raises dangers, he said.
"It may not be safe to stay there," Arnold said. "In Nigeria, people get killed in the oil fields. There are local bad guys who want a share of the action."
Other companies with subsidiaries in Nigeria include Chevron Corp., Exxon Mobil Corp., Italy's Eni SpA and French firm Total SA, which operate in tandem with the state-run Nigerian National Petroleum Corp.