NNPC: Striking Nigeria Exxon Workers Returning To Work

LONDON, April 30, 2008 (Dow Jones Newswires)

Exxon Mobil Corp. (XOM) workers in Nigeria Wednesday are returning to work after a walkout over issues such as pay, and are close to reaching a final deal to resolve the dispute that has knocked out about 30% of crude oil production in Africa's biggest oil-producing country, an official with the state-owned oil company told Dow Jones Newswires.

"The workers are returning as talks continue, but the two sides are close to reaching a deal," said Nigerian National Petroleum Corp.'s group manager for public affairs, Levi Ajuonuma, NNPC management has been mediating in the strike.

Mobil Producing Nigeria Unlimited public affairs adviser Yemi Fakayejo, however, couldn't confirm that the strikers were. MPN is ExxonMobil's Nigerian unit.

Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, workers and members decided to go back to work because of the damage the strike had caused to oil production and oil revenue, Ajuonuma said.

Although a swift conclusion to the dispute may be on the cards it will take some time for production to return to normal, as it could take several days for pipelines, drilling rigs and export facilities to be brought back into full service.

Monday ExxonMobil declared force majeure on its energy operations in Nigeria, which include output of Qua Iboe, Oso Condensate, Yoho and Erha crudes. The company was forced to make the declaration which indemnifies it from its contractual obligations, after shutting-in around 800,000 barrels a day of its output.

ICE Brent crude oil futures immediately dipped below $113 a barrel Wednesday on reports the strikers were returning to work, providing some reassurance for crude oil traders that Nigerian exports would increase soon. Prices for light, sweet crudes that are highly prized by refiners such as the key benchmark grade Qua have soared to record levels in recent weeks amid supply fears.

Nigeria is still left facing an output crisis: a series of attacks in recent months on oil installations have paralyzed production in the Niger Delta. Royal Dutch Shell PLC (RDSB.LN) confirmed an attack on a pipeline which feeds into its Bonny Light crude oil terminal knocked out some 167,000 barrels a day.

The Movement for the Emancipation of the Niger Delta the rebel group that lays claim to many of the attacks on oil infrastructure in Nigeria, also said it had attacked another Shell facility last Thursday causing an additional 350,000 barrels a day of production to be knocked out.

Even discounting this last attack and with ExxonMobil's 800,000 barrels a day restored, the total amount of crude production out of service in Nigeria is estimated at around 24%, or 600,000 barrels a day, of the country's effective pumping capacity of 2.5 million barrels a day.

LONDON, April 30, 2008 (Dow Jones Newswires)