UPDATE 2-Nigerian oil union begins nationwide strike

* Oil union strike after members laid off

* Labour ministry in talks with union

* Lengthy fuel queues across Nigeria (Adds details, NNPC quote, bullet points)

LAGOS, Dec 18 (Reuters) - One of Nigeria's largest oil unions launched an indefinite nationwide strike on Monday over the laying off of its workers as the government began a new round of talks aimed at ending the industrial action, its general secretary said.

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), whose members mainly work as managers in the upstream oil industry, started the industrial action after earlier talks with government agencies ended in deadlock, said Lumumba Okugbawa.

He said representatives of the union were holding talks with ministry of labour officials on Monday.

The strike could hit the country's crude oil production and dent exports, as was the case in December 2016 during industrial action by the union against Exxon Mobil. However, there were no immediate signs the strike was affecting output.

Nigeria is Africa's largest crude exporter and oil sales make up two-thirds of government revenue.

"PENGASSAN is on industrial action as a result of unfair labour practices by some companies, particularly indigenous oil and gas companies," said Okugbawa. He did not say how many workers were estimated to be involved in the industrial action.

The dispute arose after domestic oil and gas companies and marginal field operators laid off members of the union. Marginal fields refer to discoveries made by oil majors during exploration of larger acreage but which have been left for others to develop.

The union leader, who said office workers and staff working in distribution were among those participating in the strike, added that talks were set to be held with government officials on Monday.

Other oil industry unions were working as normal.

Lengthy fuel queues were seen in several parts of the country including in the commercial capital Lagos, in the southwest, the northeastern city of Maiduguri and the city of Jos, situated in the middle of the country.

The Nigerian National Petroleum Corporation (NNPC) issued a statement on Monday urging motorists not to engage in panic buying.

"NNPC wishes to state that relevant government agencies are in consultation with industry unions to arrive at an amicable resolution of issues over which there are threats of industrial action," said the state oil company in an emailed statement.

Nigeria's nationwide rush for fuel is expected to boost purchases of European gasoline in December, offering a potential respite to European refineries and storage terminals threatened by an oversupply that has battered margins.

Nigeria's crude production has fluctuated over the last two years due to militant attacks, pipeline theft and industrial action. (Additional reporting by Seun Sanni in Lagos, Camillus Eboh and Paul Carsten in Abuja, Kolowale Adewale in Maiduguri and Buhari Bello in Jos; Editing by Louise Heavens and Adrian Croft)