Chevron Says Nigeria Staff Declared Strike Monday

LONDON (Dow Jones Newswires), June 23, 2008

U.S. oil major Chevron Corp. Monday said its workers in Nigeria have walked off the job after weeks of talks broke down over wage and safety issues, a move that will worsen Nigeria's already ailing oil production and add more fuel to global oil price hikes.

Chevron, of San Ramon, California, said in a statement to Dow Jones Newswires it was "still too early to comment on any potential impact" of the declared work stoppage on its operations.

The strike also amplifies Chevron's own production woes in Nigeria following a militant attack late last week on one of its facilities.

The company is yet to confirm industry talks of a force majeure - halting 120,000 barrels a day of output - as a result of the attack.

Chevron didn't say how widespread the worker walk-off was, but even a low-scale strike is likely to affect some level of Chevron's Nigeria production and add more concern to global oil market over supplies.

Crude oil prices have traded higher in recent days following a spate of militant attacks in Nigeria on energy infrastructure operated by Royal Dutch Shell PLC (RDSA), Eni SpA (E), and Chevron. The attacks have shut around 1 million barrels a day of output, taking the country's production to its lowest level in two decades. Around one-third of Nigeria's installed oil production capacity is now shut.

Chevron's Nigeria production typically hovers around 350,000 barrels a day and comes from around 30 fields.

Chevron said it continued to engage the worker's white collar union.

Jonathan Omare, secretary of the Chevron unit of the Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, said the strike was declared following the "complete collapse" of talks between Chevron and Pengassan.

"I don't know how long the strike will last. That depends on Chevron's management," he told Dow Jones Newswires.

Omare added that oil production by Chevron hasn't been affected yet by the strike. He wouldn't comment on what may happen if the strike dragged on for several days.

The latest worker strife in Nigeria strike follows a one-week labor strike in April of Exxon Mobil Corp (XOM) staff that shut around 800,000 barrels a day, helping send crude prices to record levels.

Some Nigerian analysts say the recent violence against oil pipelines and infrastructure may get worse ahead of and after a scheduled peace summit in Nigeria in July that the Nigeria government hopes will lower tensions in the country's main oil producing region, the Niger Delta.

The region, which has countless militia groups and is plagued by rampant criminality and widespread poverty, got a rare bright spot of news late Sunday after the delta's main militant group announced a ceasefire that is scheduled to take affect Tuesday until further notice.

The Movement for the Emancipation of the Niger Delta said it was now open to negotiations with the government, though many peace efforts have broken down in recent years.

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