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UPDATE 3-Norway strike delays exports, supports oil price
July 2, 2012 / 10:11 AM / 5 years ago

UPDATE 3-Norway strike delays exports, supports oil price

* Conflict over pensions has cut oil production by 13 pct

* Oseberg crude shipment delayed, says trade source

* Unions to meet on Tuesday to decide on escalation

* Government has power to intervene

By Vegard Botterli and Alex Lawler

OSLO/LONDON, July 2 (Reuters) - A strike by Norway’s offshore oil and gas workers has begun to slow crude exports, a trading source familiar with the matter said on Monday, as the conflict over pension and retirement rights remained deadlocked for a ninth day.

The delay in loadings of Oseberg crude is the first sign the week-long strike has affected shipments from the world’s eighth-largest exporter. Production of oil and natural gas liquids has been cut by about 13 percent of capacity, and some natural gas output has also been affected.

“There has been some impact,” the source said. “There is a cargo scheduled to load on July 1-3, and it’s not loaded yet.”

The strike has provided support to oil prices, even as Brent futures fell on Monday. Oseberg is part of the North Sea dated Brent benchmark used as the basis for many of the world’s trades.

The government has powers to call an end to the dispute if it believes safety or national interests are at stake. The sector accounts for a fifth of gross domestic product and nearly half of Norway’s exports.

“As of now we are still not seeing any reasons for intervening in the strike. We continue to monitor the situation closely,” senior adviser at the Labour ministry Gro Oerset told Reuters.

Jan Hodneland, chief negotiator at the Norwegian Oil Industry Association (OLF), said, “There were no contacts with the labour unions this weekend and we have no plans to contact them today.”

Leif Sande, head of Industri Energi, the largest of the three unions on strike, said the situation remained unchanged from before the weekend.

“Nothing has changed at all,” he said.

State-controlled oil company Statoil said the strike has shut five fields including Oseberg, cutting production of oil and natural gas liquids by 230,000 to 250,000 barrels per day. About 4 percent of Norway’s gas output has also been affected, according to industry figures.

ESCALATION PROSPECT

Unions are scheduled to meet on Tuesday to decide on whether to escalate the strike, a step that would raise the risk of government intervention.

The trade unions’ strategy depends on how their leaders see the chances of getting what they want, said a source who is knowledgeable about Statoil.

If the unions see little chance for success as low, the leaders will be more inclined to escalate the strike to provoke intervention and then shift the blame on the government.

“But if they see a chance that they can get what they want, they would continue a low-profile strike as long as necessary,” he said.

Professor Oeystein Noreng at the BI Norwegian Business School said he expected the strike to last longer and continue to put pressure on Statoil, because the government faces elections next year and is reluctant to intervene over the pensions issue.

“To a large extent, it’s Statoil’s internal affair, which has boiled over. The government would prefer not to intervene,” he told Reuters.

The unions have criticised Statoil’s decision to keep an early retirement option for top executives, while taking it away from workers.

They demanded the right to retire at 62 for all offshore workers, but OLF has refused to negotiate pensions, saying it was up to individual companies.

Statoil has declined to comment on the issue.

“It (the strike) can go on at reduced levels for quite some time to embarrass Statoil,” Noreng added. “There could be a compromise (over pensions).”

Oseberg crude is loaded at the Sture terminal, near Bergen.

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