Norway’s government ended a 16-day dispute between offshore oil and gas workers and their employers, averting a lockout that had threatened to halt production from western Europe’s largest crude exporter.
“We are relieved that we do not need to shut down production on the Norwegian continental shelf, but if the government hadn’t acted now, we would have done that,” Jan Hodneland, chief negotiator for the Norwegian Oil Industry Association, said in an e-mailed statement. “Everything was ready to shut down after midnight.”
The intervention came after the association, which counts Statoil ASA (STL), Exxon Mobil Corp. (XOM) and BP Plc (BP/) among its members, threatened to shut down all output from midnight. The act of brinkmanship was intended to force the government to end the walkout as it did in 1997, 2000 and 2004, said Teodor Sveen Nilsen, an analyst at Swedbank AB. (SWEDA)
A lockout “would have had vital repercussions for the Norwegian economy and also for securing deliveries to Europe,” Labor Minister Hanne Bjurstroem said in an interview after announcing the forced resolution. “The government has to take responsibility and do what we have decided today. That it would hurt Norway as a stable and predictable supplier of oil and gas, that is one of the main reasons” the government intervened, she said.
The dispute, which began on June 24, was the first industry-wide strike by Norway’s energy workers since 2004 and the longest lasting, according to SAFE, one of the three unions involved. Oil traded in New York declined as much as 63 cents to $85.36 a barrel after the strike was called off.
The disagreement centered on pension reforms, which would raise the age of entitlement to a full company pension beyond 62 years. The energy companies have said they’re abiding by the government’s general pension reforms.
Talks between the association and unions broke down on July 8 after 13 hours. The dispute will now go to compulsory arbitration, the outcome of which is binding.
Statoil is now preparing to resume production at installations that have been affected by the strike, the company said in a statement after the forced resolution was announced.
Statoil installations that were affected by the labor dispute are the Oseberg Field Centre, Oseberg South, Oseberg East, Oseberg C, Heidrun, Huldra, Veslefrikk and Brage, it said.
“Production from these installations will be resumed as quickly as possible,” Statoil said. “It may take from one to two days to get production started and Statoil expects to have the fields back in full production within a week.”
Norway pumped 1.63 million barrels of oil a day in May, according to the Petroleum Directorate. About 15 percent of the nation’s oil production and 7 percent of gas was affected before the lockout was called off, the Oil Industry Association said June 27. That’s cost the government and companies 3.1 billion kroner ($508 million) in the 16-day strike, it said today. The dispute disrupted as much as 250,000 barrels of oil output a day, Statoil said