Norway government seen intervening to end oil strike

Reuters News
Posted: Jul 06, 2012 9:09 AM
Norway government seen intervening to end oil strike

By Nerijus Adomaitis and Vegard Botterli

OSLO (Reuters) - Norway's government has summoned striking offshore workers and their employers to a meeting later on Friday as a pending lockout threatens to cut off oil and gas exports from western Europe's top producer.

Offshore workers demanding changes to their retirement terms walked out 13 days ago, cutting Norway's oil production by around 13 percent and its gas output by 4 percent.

The dispute, being closely monitored by the oil market, escalated on Thursday after Norway's oil industry association, OLF, announced plans to lock the workers out from July 10.

The Labour Ministry has called both sides in the conflict to a meeting at 12 noon.

Analysts said it was likely the government would take action to avert the lockout and end the strike in order to safeguard Norway's image as a reliable energy exporter and reassure the oil market.

"I think it will be very likely that something happens today," said Thina Saltvedt, an oil analyst at Nordea.

"It will be very likely, because of the consequences."

Norway is western Europe's biggest natural gas exporter and the world's eighth-largest crude exporter, with energy accounting for about half of its total exports.

Unions said on Friday that the ball was no longer in their court.

"We are trying to keep spirits high despite the lockout. We are currently engaged in the process of ensuring that the shutdown happens in a secure and controlled way," said Hilde Marit Rysst, leader of the union SAFE. "This is not over until it is over."

The dispute centers on a demand for early retirement at 62 by offshore workers which has raised eyebrows in a country that already pays the world's highest oil and gas salaries, double those of similar workers in Britain.

Norwegian oil and gas workers are the best paid in the world, followed by those in Australia, Brunei and the Netherlands, earning more than twice the average salary of all countries surveyed, according to a Hays Oil & Gas report.

A spokesman at the OLF, which represents Statoil and other operators, said staff deserved good conditions but that employers could not agree to unequal pension schemes among industrial workers.

Norway's oil strike has helped buoy Brent crude oil futures, with prices spiking above $102 a barrel on Thursday when the lockout was called. Prices cooled to just below $100 on Friday on worries over weak global economic growth.


The Norwegian government did step in to prevent any major supply disruptions in 2004, acting just one day after the oil industry called a lockout.

It has the authority to force an end to a strike if it believes safety is being compromised or vital national interests could be harmed.

"We are following the situation," a spokesman at the Labour Ministry said.

Labour unions defend the demand for early retirement as justified due to the industry's harsh working conditions. They argue that top executives at Statoil, which dominates the sector, are already eligible to retire early.

The OLF argues that salaries are already high and that union demands are not in line with government pension reforms. They say it should be up to individual companies to decide.

Average salaries in the sector amount to roughly 727,200 Norwegian crowns ($120,000), with offshore staff the best paid industrial workers in Norway, according to the statistics office.

(Writing by Mia Shanley, editing by James Jukwey and Jason Neely)