SHELL BEARS BRUNT OF OIL WORKERS' STRIKE IN NIGERIA

Shell Petroleum Development Co. of Nigeria Ltd. appears to have been worst hit in early strike action by Nigeria's oil workers' unions.

However, unrest appeared likely last week to spread to other producers' operations. A general strike by all Nigeria's unions was scheduled to begin Aug. 3.

Nigeria's total production is down 20% from its normal volume of about 2 million b/d. Shell reportedly has lost one third of its production, which averaged 290,000 b/d last year.

A Shell spokesman said unions' intimidation and attacks on Shell and contractors' staff continued to curtail production.

On Aug. 1 the company extended force majeure on oil deliveries to 8 days at Bonny terminal and 6 days at Forcados terminals. Force majeure of 4-5 days originally was declared July 27.

WHY SHELL?

Julian Lee, oil analyst at London's Centre for Global Energy Studies, said Shell had been targeted by unions because it is the biggest producer in Nigeria. Also, much of Shell's production lies in onshore areas where support for imprisoned opposition leader Moshood Abiola is strongest. Jailing of Abiola on treason charges triggered the oil unions' strike (OGJ, July 18, Newsletter).

Lee said Nigeria's offshore production is least likely to be affected.

Other reports suggested Chevron Corp. and Mobil Oil Nigeria Ltd. had been singled out as the next targets for oil union intimidation.

Wariebe Agamene, president of Nigeria's National Union of Petroleum & Natural Gas Workers (Nupeng), reportedly warned persons he viewed as strike breakers: "If they don't stop their treacherous activities, the next option will involve body bags."

Nigeria's oil workers' strike emerged once again as the main influence on oil prices. Brent crude oil for September delivery passed $19/bbl Aug. 1, after traders learned that unions planned to boycott talks with government.

Oil prices eased off from the $19/bbl level in later trading Aug. 1, closing at $18.90/bbl that day and falling to $18.51/bbl for Brent crude by close of business Aug. 2.