Copenhagen (Platts)--6Jul2012/633 am EDT/1033 GMT

The Norwegian government is expected to step in promptly to stop an industry lockout of offshore workers that would have caused a complete shutdown of oil and gas production next week as early, union leaders, analysts and company executives said Friday.

One union head said a government move was now all but inevitable.

A shutdown from Tuesday next week would have a major impact on oil markets in the already skittish climate.

The latest statistics available showed Norway was producing some 1.631 million b/d of crude and 8.9 billion cubic meters of gas in May, according to preliminary figures from the Norwegian Petroleum Directorate.

Article continues below...

Platts 6th Annual European Refining Markets Conference: Maintaining Europe's Downstream Industry 24-25 September 2012, Marriott Brussels, Brussels, Belgium
	Attracting 150+ industry professionals, the conference provides attendees with a practical insight into the global refining environment, product and price shifts and legislative developments while unearthing strategies for increased refinery responsiveness, risk mitigation and investment procurement.

"Realistically we reckon they will make some kind of contact with us and the employers or they will just move to stop the strike," the president of the SAFE union, Hilde-Marit Rysst, said.

"To stop the strike, the government in effect would make a law on the spot. The strike would then stop immediately," she told Platts by telephone.

Rysst said government intervention by the Labor Minister Hanne Bjurstrom might be held off until Monday, if only to prevent the impression spreading that the government had been forced into acting by the oil and gas industry.

"It could happen at any time. The minister might first wait during the weekend to make the companies nervous. We are hoping she wants them to fry in their own fat," she added.

Unions representing 7,000 offshore workers declared a strike over pension conditions on June 24, with 700 workers walking off the job and forcing Statoil to close production at six fields, shutting in about 240,000 b/d of crude output and about 12 million cu m/day of gas.

STAKES RAISED

The industry group OLF on Thursday dramatically raised the stakes by declaring a lockout of all workers and announcing that all Norwegian production would cease from Tuesday.

Labor Minister Hanne Bjurstrom, who can force the parties back to the negotiating table or end the strike and lockout and order a return to production, was unavailable to comment and her advisers were not responding to telephone calls.

"The minister is monitoring the situation continuously. We have no further comment," a spokesman said.

But Norwegian Oil and Energy Minister Ola Boren Moe told one Norwegian media outlet that while he could not be involved in any mediation, he found it hard to believe that Norwegian production could be allowed to cease next week.

"Norway accounts for 20% of gas deliveries to Europe. It goes without saying that it is impossible to think that these deliveries would cease," Moe told the online edition of Trondheim regional newspaper Adresseavisen.

A spokesman for the minister said Moe was on holiday and could not comment. He said the minister had spoken to Adresseavisen and the comments were probably correct, but could not confirm them.

The prospect of Norwegian oil and gas production going offline next week helped the price of oil rebound this week to over $100 a barrel, traders said.

Norway is the world's eighth largest oil exporter but Norwegian gas exports cover close to 20% of European gas consumption -- with most of the exports going to Germany, the UK, Belgium and France, where Norwegian gas accounts for 20-40% of the total gas consumption.

OLF officials were in meetings and not available for comment Friday morning.

ACTION ANTICIPATED

But the CEO of one Norwegian oil and gas group, North Energy ASA, said the widespread expectation in the industry was for the government to intervene quickly to stop the lockout and the strike and restore full production.

"I think they will intervene at this point. I don't know exactly when it will happen. It could happen today, or even during the weekend," North Energy CEO Erik Karlstrom said. "It is a pattern we have seen in the past: They have a lockout and the government intervenes."

But some union leaders held out hope that they government would stick by what it has already called a legal strike and not intervene.

"The strike is not dead," Industri Energi union president Leif Sande said by telephone. "I hope the government lets the strike continue and not move into compulsory arbitration."

He said the Norwegian government was a centre-left coalition and several partners in it had indicated misgivings about compulsory government action.

"The socialists have said before it is not in their policy and the labour party is mixed," he said.

But analysts said they too saw the government moving to stop a complete Norwegian shelf shutdown.

"Historically we know that if there is a lockout the strike is virtually over," DnB Markets analyst Torbjorn Kjus told news agency NTB.

--Patrick McLoughlin, newsdesk@platts.com

Tweet