Sector News

Norway oil wage talks begin as workers threaten strike

July 1, 2016
News

Energy companies and trade unions in Norway began two-day wage talks on Thursday in a bid to avert a strike that would cut output from Europe’s largest oil producer by six percent, the Norwegian Oil and Gas Association (NOG) said.

Unions are seeking pay increases in line with other industries while producers want workers to refrain from seeking such increases and to accept more flexible work practices citing still weak oil prices.

Brent crude futures trading at about $50 per barrel are up from a January low under $30 but still well below 2014’s peak of $115.

Oil and gas production at five offshore fields could be shut from July 2 if no compromise is found, NOG said, and the strike could spread subsequently.

The five fields are ExxonMobil’s Balder, Ringhorne and Jotun, Engie’s Gjoea and Wintershall’s Vega.

That would cut Norway’s output by 229,000 barrels of oil equivalents per day, said NOG, which negotiates on behalf of the energy firms.

Hundreds of workers on eight oil platforms operated by Norway’s Statoil would also strike but output would be maintained, NOG said.

State-mediated wage talks so far in 2016 have resulted in wage increases of around 2.4 percent. Union leaders said the talks would be difficult, but added they aim to come to an agreement with employers.

“The main point of contention is that employers won’t accept a 2.4 percent framework,” Industri Energi union leader Leif Sande said in a statement.

“The distance between us is almost as wide as the Mediterranean Sea,” Hilde-Marit Rysst, head of the Safe labour union, told Reuters at the start of the talks. “I think we’ll be able to resolve this though, as both sides want a solution.”

The mandatory state-mediated negotiations have a formal deadline at 2200 GMT on July 1, but typically run over by several hours. Therefore a strike could start as early as July 2.

“For us, we could strike for as long as it takes. We have all the means to keep a strike going for a long time,” Rysst said. “If we want to escalate, we have to give notice four days in advance.”

About 755 workers would go on strike initially, while a protracted conflict could eventually affect more than 7,400 workers, data from the mediator’s office showed.

Rules governing labour disputes in Norway give the government the power to force an end to strikes under certain conditions, including when national interests are considered to be at stake.

In 2012, the government of the time ended a conflict after 16 days when employers threatened a lockout of workers that would have shut down all output of oil and gas.

By Terje Solsvik and Stine Jacobsen

Source: Reuters

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