Sunday, April 27, 2008

Nigerian Oil Strike Ceases Production

This past week, ExxonMobil Nigeria's union workers have gone on strike for four days and counting now, with no immediate resolution in sight. The strike is a result of union leaders demanding better compensation for the employees working on the Nigerian platforms. This has led to a standstill in oil production for Exxon in the country, which translates to roughly 770,000 bbd/day that the company is now not producing.

I find it almost astounding that a deal cannot be struck when the profits from upstream production are so lucrative at the moment. I don't know how much Exxon would stand to lose by giving in to employee demands, but I can't imagine it would be greater than the amount they're losing by not producing in Nigeria at all. It's also interesting how much bigger a deal this is than if it happened a year or two ago- whereas then it would almost be an afterthought with the assumption that something will be worked out eventually, the fact that we're losing that much oil on the market is another factor that I'm sure will lead to an even greater hike in oil prices.

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