Norwegian Oil Strike Escalates as Wage Talks Reach Deadlock

After a trade union rejected a growth in real pay and instead opted for a strike, Norwegian oil production risks losing an equivalent of 330,000 barrels per day (or 8 percent of the country’s output).

The Norwegian Organisation of Managers and Executives (Lederne) said it is moving forward with plans to extend its strike.

At midnight, 126 additional members joined the strike, jeopardising prodiction at six oil fields, including Gudrun, Gina Krog, Kvitebjørn, and Gjøa operated by Equinor and Neptune Energy, the economic news portal E24 reported.

If production at the six oil and gas fields is stopped, this means that production may be reduced by an equivalent of 330,000 barrels per day, which corresponds to 8 percent of Norway’s production.

According to union president Audun Ingvartsen, there is no light at the end of the tunnel in sight.

“The employer side still shows no willingness to meet our demands, and therefore the escalation is a fact”, Ingvartsen said in a press release.

The conflict has been going on since the end of September, when 43 workers went on strike as wage negotiations broke down.

“We presented a financial offer which was accepted by the Norwegian Union of Industry and Energy Workers (Industry Energy) and the Norwegian Union of Energy Workers (Safe). These represent 85 percent of the offshore workforce. The smallest union, Lederne, rejected the offer and opted for a strike. It has also demanded that the area covered by the collective pay settlement be expanded – which falls outside the scope of the negotiations over offshore agreements”, Jan Hodneland, chief negotiator at Norwegian Oil and Gas, said in a statement.

The offer from Norwegian Oil and Gas represented a growth in real pay and was made in identical terms to the three trade unions. Under the settlement, offshore workers are set to receive an overall pay increase of NOK 4,700 (roughly $510), an increase of per-hour supplements and increased allowances for working on public holidays.

Meanwhile, low oil prices and declining demand have led to a 30-percent drop in activity in oil exploration on the Norwegian shelf, analysis company Westwood reported. By comparison, activity in oil exploration on the British shelf in the North Sea has fallen by as much as 70 percent.

While the industry remains dependent on finding new oil fields, big questions are being asked as to whether it is still worth it to spend money on exploration.

Norway is one of the world’s leading exporters of energy resources, covering about 2 percent of global oil demand and 3 percent of natural gas demand. Most of the oil and gas output from the Norwegian shelf is exported. Combined, they amount to about half of the total value of Norwegian goods export, being the most important commodities in the Norwegian economy. The oil and gas riches have allowed Norway to establish the world’s biggest sovereign wealth fund worth over $1 trillion.

Leave comment

Your email address will not be published. Required fields are marked with *.