Lockout Shuts Down Glitne Production

The Petrojarl I production ship operating on Statoil's Glitne field in the North Sea is one of 12 offshore facilities hit by a lockout imposed as part of a long-running labor dispute.

Implemented by the Norwegian Shipowners Association, the response to strike action took effect at midnight on September 2nd.

It covers all members of the Federation of Oil Workers Trade Unions (OFS) on three mobile rigs and eight drilling units on fixed platforms as well as on the chartered Petrojarl I.

The immediate consequence for Statoil, as a third party affected by this dispute, will be a halt to production from Glitne.

Should the lockout be short-lived, it will have minimal consequences for production drilling by Smedvig on the group's Statfjord field in the North Sea.

The impact of the OFS stoppage, now in its seventh week, on work being done by units under charter to Statoil has so far been small.

About 200 OFS members have been striking since early July on a number of rigs. These include Transocean Searcher, working for Statoil on the Åsgard Q project in the Norwegian Sea. This is a subsea development which will increase recovery on Smørbukk South by 26 million barrels of oil.

The production consequences of the conflict have also been small so far, but the group will be assessing the impact on individual projects if the stoppage proves lasting.

"We will also need to consider possible damage-limitation measures," reports Victor Sneberg, human resources manager for Exploration & Production Norway.

The Polar Pioneer rig, which has been involved in the strike since July 2nd, is due to start drilling for Statoil on Snøhvit on October 1st.

If the conflict finds a quick resolution, the impact on the project will be limited. The delay will not affect the planned production start in 2005.

Mr. Sneberg reports that the work of shutting down Glitne is beginning today, September 3rd. Production is expected to come to a complete halt just after the weekend.

This means that output will be reduced by about 30,000 barrels of oil per day, of which Statoil's share is about 17,000 barrels. The Petrojarl 1 production and storage vessel, owned by Petroleum Geo-Services, handles production on Glitne.

Production drilling is currently only under way on Statfjord B, but a planned drilling campaign on this platform and Statfjord C might have to be postponed in the event of a long strike.

In the short term, the conflict has only caused minor reductions in oil production from Statfjord.

The dispute between the Norwegian Shipowners Association and the OFS focuses on disagreement over a new agreement on pay and conditions.

With the lockout covering about 300 people, roughly 500 of the 850 OFS members in the Norwegian rig sector will be involved in the stoppage.