Oil firms trim jobs, operations over budget
12th Nov 2002, Source: The Guardian
Major oil exploration companies in Nigeria at the receiving end of the 20 per cent cut in this year's joint venture budget are no longer prepared to swallow the effects of the policy alone.
They have therefore adopted austerity measures in which the burden of the unsavoury development is being passed on to their employees and contractors.
Three of the six affected outfits, which are at the forefront of the cost saving style, have embarked on staff rationalisation, suspension of fresh contracts for some support services and streamlining of core business. Their action has, of course, also been occasioned by the reduction in Nigeria's production quota by the Organisation of Petroleum, Exporting Countries (OPEC) from 1.911 million barrels per day to 1.787 mbd, leading to reduction in revenue intake.
The Guardian learnt that a major party in the joint venture agreement, among its numerous cost-saving measures has even cut some of the perks, including supply of newspapers to managers and directors.
Similarly, it is quietly communicating to the workers that based on new technologies in use in some of its operations, their services will no longer be needed.
Another operator in the JVA which recently had problems with its workers over a merger deal, is using the fusion of the two companies to justify the cut in the workforce.
A senior official in the industry disclosed that the reduction in the workforce was basically tailored towards employees who are advanced in age and those whose productivity have declined considerably.
He said that with a lot of investment in new technology and best practices in service delivery, some of the workers who might not cope with the trend were being advised to take advantage of the severance package and leave.
But a source at the National Petroleum Investment Management Services (NAPIMS), an arm of the Nigerian National Petroleum Corporation (NNPC), said the industry is faced with dwindling operational budget. He urged that care should be taken in over-flooding NAPIMS with terminal payments rather than to use such funds to enhance oil and gas exploration and production.
NAPIMS regulates the upstream sector of the oil industry.
The NAPIMS official said rationalisation of the workforce by the oil companies is not the best approach considering the fact that those usually affected are workers with a wealth of experience to share with other employees.
Already, Chevron and Exxon-Mobil have reduced the level of their jack-up drilling rigs following the cut in joint venture budget.
The Managing Director of Chevron Nigeria Limited, Mr. Jay Pryor, confirmed recently that the number of rigs had gone down to two from four.
Exxon-Mobil also took the same step to close two of its rigs to keep key operations going.
Chevron, which targets 600,000 barrels daily production this year, currently produces between 370,000 to 380,000 barrels daily.
Shell Petroleum Development Company of Nigeria's (SPDC) output, which stood at between 900,000 and one million barrels has dropped to about 700,000 barrels per day.
The production cut, occasioned by the output restriction placed by the Organisation of Petroleum Exporting Countries (OPEC), is believed to have been compounded by the 20 per cent cash-call cut by the government through the NNPC.
The instability in cash-call budget began in January this year when the National Assembly approved .065 billion against the .5 billion submitted by the Executive.
OPEC also reduced Nigeria's output to 1.787 million barrels per day (msd) from 1.911mbd. This reduced expected revenue by 0 million by June this year.
In the first six months of the year, revenue from oil stood at .44 billion. Analysts have projected that by the end of the year, oil revenue may peak at billion compared to .03 billion realised last year.
Meanwhile, workers of Mobil Producing Nigeria Unlimited (MPN) have embarked on an industrial action to press for better conditions of service.
The strike is aimed at achieving an increase in salaries and allowances, reduction in expatriate quota and the recall of the Managing Director, Mr. Mike Fry to his home country.
They accused him of adopting anti-Nigerian policies.
According to investigation, the current warning strike would become total on Thursday when the workers are expected to completely down tools.
The industrial action is not a Lagos affair only as workers at the company's main operational base, Qua Iboe Terminal (QIT) in Akwa Ibom State have shunned their duty post.
This development is believed to have threatened about 700, 600 barrels of crude oil being the output of Mobil to the international oil market from the country.
But, an official of the company told The Guardian that the management had commenced negotiation with the leadership of the workers' union.
"There was no work to rule declared so far, but what happened yesterday was solidarity strike which lasted a few hours before the workers returned to work in the morning of yesterday", he said.
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