Union Warns Statoil Not to Scale Back Agreements

Reuters

OSLO, June 28 (Reuters) - Norwegian oil major Statoil must halt attempts to scale back existing labor agreements if it wants to prevent a strike that would hit output from July 2, a trade union said on Tuesday.

About 755 Norwegian workers on seven oil and gas fields operated by Statoil, ExxonMobil and Engie will strike unless a deal on wages and other working conditions is agreed, three unions announced on Monday.

The fields account for about 18 percent of Norway's combined output of crude oil, natural gas and natural gas liquids (NGL), a Reuters calculation shows.

"I'm certain that employers have understood that we won't accept a destruction of current agreements," said Joern Erik Boe, spokesman for union Industri Energi, which represents two-thirds of the workers that would strike.

"The scope of the announced plans will hopefully put sufficient pressure on the largest player, Statoil, without exposing us to the risk of government intervention," he said in a statement.

Norway's rules governing labour disputes give the government the power to force an end to strikes under certain conditions, including when national interests are considered to be at stake.

In 2012, the government of the time ended a conflict when employers threatened a lockout of workers that would have shut down all output of oil and gas.

On the seven fields that could be hit initially, overall oil output stood at 285,000 barrels per day in the first four months of 2016, with natural gas production of 48.5 million cubic metres (mcm) per day and NGL at 91,600 barrels of oil equivalent per day.

The summer season typically sees a drop in output due to scheduled maintenance and lower demand for gas, however, making it difficult to calculate the exact impact of a strike.

Engie and ExxonMobil said a conflict would cut output at the fields they operate, while Statoil declined to comment on all aspects of the negotiations, which will be hosted by a state mediator on June 30 and July 1.

Norway currently produces about 1.6 million barrels of crude and 280 million cubic metres of gas per day. Its combined NGL and condensate output is equivalent to about 400,000 barrels per day.

Employers have argued that a plunge in oil prices since 2014 must be accompanied by cost cuts and flexible work practices to help keep the industry competitive.

A protracted conflict could ultimately result in more than 7,400 workers going on strike, data from the state mediator's office show.

(Reporting by Terje Solsvik and Henrik Stolen; editing by Jason Neely)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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