Norway government seen heading off total oil, gas output shutdown
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.
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"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.
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
"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
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
"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, email@example.com