Norwegian Oil Workers Strike; Oseberg and Heidrun Fields Hit
by Quintella Koh
Monday, June 25, 2012
More than 700 oil workers went on strike in Norway Sunday after pension negotiations broke down, prompting production closures which could cost tens of millions of dollars per day, the Norwegian Oil Industry Association (OLF) said.
The strike, which started at 4 a.m. local time on Sunday involved employees of Norwegian oil group Statoil, British oil giant BP's Norwegian division and ESS Support Service, which is owned by the British Compass Group.
The strike affects Statoil's Oseberg and Heidrun fields in the North Sea and its Tjeldbergodden industrial complex in mid-Norway.
The Oseberg and Heidrun fields will take four to five days to shut down, while the Tjeldbergodden industrial complex will have to be closed on Monday.
The BP-ESS operated Skarv field will also be affected, as plans to start production on the field in autumn will be delayed.
"The unions are imposing substantial costs on the companies and Norwegian society. The strike will cost roughly $25 million (NOK 150 million) per day, so it will not take long before the bill tops NOK 1 billion [$168 million]," Jan Hodneland, chief negotiator for the OLF said in a statement.
Unions had demanded wage increases, better overtime pay and the right to retire at 62 for the sector's 7,000 workers, but the OLF had said ahead of negotiations that pensions would not be on the table during the talks.
"Completely unreasonable pension demands by the offshore unions clearly show that they're placing themselves apart from other workers in Norway," Hodneland said.
"Oil company employees have an average annual income of NOK 1 million [$168,000] and a retirement age of 65. This already makes them Norway's pension winners. They've nevertheless opted to use their power to win even better terms," Hodneland added.
A possible stepping-up of strike action or a lockout by the employers can be implemented at four days' notice, the OLF said.
Oseberg is a Statoil-operated offshore oil field in the North Sea located 87 miles (140 kilometers) northwest of the city of Bergen. The Heidrun oil field is an oil and gas field located 109 miles (175 kilometers) west of Kristiansund while the Skarv field is sited 22 miles (35 kilometers) north of the Norne field and 28 miles (45 kilometers) south of the Heidrun field.
Oseberg is a critical oil field as crude produced from it forms part of the Brent Index. The index represents the average price of trading in the 21-day BFOE (Brent Blend, Forties, Oseberg, Ekofisk) market in the relevant delivery month as reported by the industry media. Production disruptions in Oseberg could cause Brent prices to rally in the coming days.
"Nymex light, sweet crude and ICE Brent futures could increase up to $10 per barrel by the end of this week if the strike continues. The crude futures market could see gains ahead, but the price increases will not be sustainable in the long-term," Newedge brokerage analyst Ken Hasegawa told Rigzone.
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