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DE RUEHUJA #2100/01 3241155
ZNY CCCCC ZZH
O 201155Z NOV 09 ZDK
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7530
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 2326
RUEHSA/AMCONSUL JOHANNESBURG 0130
RUEHZK/ECOWAS COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

C O N F I D E N T I A L SECTION 01 OF 02 ABUJA 002100 
 
NOFORN 
SIPDIS 
 
STATE PASS USAID/AFR/SD FOR CURTIS, ATWOOD AND SCHLAGENHAUF 
STATE PASS TO USTDA-PAUL MARIN, EXIM-JRICHTER 
STATE PASS USTR FOR AGAMA 
STATE PASS TO OPIC-BARBARA GIBIAN AND STEVE SMITH 
STATE FOR EEB/ESC DOUG HENGEL, EEB/ESC /IEC/ENR-DAVID HENRY 
STATE FOR S/CIEA-DAVID GOLDWYN AND MICHAEL SULLIVAN 
JOHANNESBURG FOR NAGY 
USDOE FOR GEORGE PERSON AND THOMAS SPERL 
TREASURY FOR ANTHONY IERONIMO, ADAM BARCAN 
DOC FOR 3317/ITA/OA/BURRESS AND 3130/USFC/OIO/ANESA/REED 
 
E.O. 12958: DECL: 10/14/2019 
TAGS: ENRG EPET INV ELAB PGOV PREL PHUM EAID NI
 
SUBJECT: S/CIEA GOLDWYN MEETS WITH NIGERIAN PETROLEUM UNIONS 
 
REF: ABUJA 2006 
 
Classified By: Ambassador Robin R. Sanders for reasons 1.4. (b 
& d). 
 
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SUMMARY 
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¶1. (C) U.S. State Department Coordinator for International Energy 
Affairs (S/CIEA) David Goldwyn met with leaders of Nigeria's two 
largest petroleum unions met with on November 11 to discuss union 
perspectives on GON efforts to reform the petroleum sector, 
specifically plans for downstream deregulation.  The unions also 
discussed U.S. companies' gradual shift toward temporary contract 
labor, "unfair wages, and overall declining labor management 
standards," which unions claim negatively affect livelihoods. 
Goldwyn discussed the need for more transparency in the energy 
sector, the benefits of more competition in the energy sector, job 
creation, and the need to reform energy subsidies to increase 
investment.  Goldwyn's meeting follows months of labor union protest 
rallies and calls for strikes over deregulation and precedes a 
potential country-wide strike should these plans move forward without 
the negotiated support of the unions.  END SUMMARY. 
 
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WE ARE NOT AGAINST DEREGULATION 
------------------------------- 
 
¶2. (C) Goldwyn met with leaders from Nigeria's two largest petroleum 
sector labor unions: Petroleum and Natural Gas Senior Staff 
Association of Nigeria (PENGASSAN) and National Union of Petroleum 
and Natural Gas Workers (NUPENG) on November 11.  Trade Union 
Congress (TUC) President Peter Esele also attended.  (NOTE: TUC is 
the national umbrella union for PENGASSAN, while the Nigeria Labor 
Congress (NLC) represents NUPENG.  Both TUC and NLC are Nigeria's 
largest and most influential union coalitions.  END NOTE.) 
PENGASSAN, NUPENG, and TUC leaders all agreed that reform in 
Nigeria's petroleum sector would be welcome.  Esele clarified that 
the petroleum unions are "not against deregulation," but rather 
oppose the GON's "lack of proper planning to ensure transparency, 
efficiency, and economic development for all Nigerians."  More 
specifically, Esele criticized the GON's deregulation plans for 
having no controls in place to prevent importing and marketing of 
petroleum refined products0yQVN7-6Uare key, but so are measures that ensure transparency. 
Deregulation, if done correctly, will spur investment, create jobs, 
and provide more access to power for the majority of Nigerians. 
 
¶3. (C) NUPENG President Peter Akpatason noted that PENGASSAN and 
NUPENG welcomed downstream competition, which would keep consumer 
costs down.  He added that the two unions played an important role in 
Qcosts down.  He added that the two unions played an important role in 
promoting the 2003 Downstream Liberation Policy, which opened 
opportunities for other prospective investors in the downstream oil 
and gas sector.  Akpatason criticized the GON for not including, in 
either its deregulation policy or the Petroleum Industry Bill (PIB), 
any focus on refinery infrastructure development, which he argued was 
"another critical component to keeping costs under control."  He 
explained that "absent refineries and given increased demand for 
refined petroleum products, the government has to rely on the 
expensive option of importing refined products."  Esele commented 
that the poor state of port facilities creates additional problems 
and costs, which domestic refineries could help control.  He 
explained that Nigeria's import facilities were never designed for 
current petroleum demand, causing significant delays in offloading 
and heavy demurrage costs.  He added that import facilities also have 
shallow jetties, which require lightering, as small vessels must 
unload refined products from much larger vessels. 
 
 
ABUJA 00002100  002 OF 002 
 
 
¶4. (C) Several rounds of negotiations with the GON on deregulation 
and the PIB have not produced any results, according to Esele.  He 
said that the GON held PIB stakeholder consultations simply to "check 
off the box;" the GON has made clear its intention to proceed with 
deregulation "with or without our consent."  NLC Lagos Chairman Denja 
Yakub told Labor Officer separately on November 10 that the TUC-NLC 
National Executive Council will soon meet to approve a strategy for a 
nation-wide strike, most likely beginning with a two-day warning 
strike before progressing into a longer shutdown.  Yakub complained 
that "the GON is not listening, and therefore we will have no choice 
but to strike as we did in 2007." 
 
--------------------------------------------- --- 
U.S. OIL COMPANIES AND DECLINING LABOR STANDARDS 
--------------------------------------------- --- 
 
¶5. (C) PENGASSAN Deputy President Mustapha Wali informed Goldwyn of 
U.S. oil companies' declining labor practices.  He claimed that 
third-party outsourcing seriously threatened the livelihoods of union 
employees.  He explained that ExxonMobil and Conoco Phillips are 
"using intimidation to respond to union requests for fair wages and 
union membership for contract laborers who are doing the same work 
for half the price."  NUPENG President Akpatason asserted that the 
gradual increase of contract labor among IOCs, including U.S. 
companies, has led to worker exploitation.  He alleged that thousands 
of people have been hired as temporary contract staff, when in 
actuality, many are employed under illegally revolving three-month 
contracts, performing the same tasks, some of which last more than 15 
years.  Esele added that these people get "half the pay and with no 
benefits."  Akpatason also noted that the process of contracting 
creates more layers of subcontracting, which results in not knowing 
who is actually hiring and paying contract staff. 
 
¶6. (C) Wali expressed similar discontent for U.S. oil companies for 
violating national expatriate quota laws.  Wali claimed that a 
"disproportionate amount of higher-paid technical and management 
positions go to foreigners," noting that Chevron hires "filled more 
than three-quarters of top management positions with expatriates, 
earning pay and benefit packages far exceeding those of Nigerians 
performing the same work."  Akpatason pointed out that an increasing 
amount of expatriate workers are being hired from Asia to fill 
blue-collar jobs. 
 
¶7. (SBU) Goldwyn responded that promoting local content in this 
sector is key, but it will take time to build the capacity necessary, 
especially for technical jobs.  He discussed the model of Trinidad 
and Tobago.  Nigeria needs to focus on building a solid higher 
education system to churn out the engineers and geologists needed by 
industry.  An apprentice system, as advocated by the unions, has its 
place, but doesn't go far enough. 
Qplace, but doesn't go far enough. 
 
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COMMENT 
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¶8. (C) The unions' statement that they are not against deregulation 
per se was a positive signal. They are likely to trade support for 
this measure to gain concessions from the government in other areas, 
such as job creation.  The TUC and NLC have acquired greater strength 
in mobilizing and organizing its members and forging alliances with 
civil society organizations and other activists around popular 
causes.  Growing discontent and greater union strength could lead to 
another nationwide union strike, resulting in further delays to 
petroleum sector reform.  Such an outcome could also galvanize 
support for NLC and TUC's other priorities, such as IOC fair labor 
practices, minimum wage reviews, and electoral reform (reftel).  END 
COMMENT. 
 
SANDERS