Wage talks involving around 8,000 oil drilling workers in Norway broke down early on May 24, labour unions said, raising the risk of strike action later this year that would disrupt exploration but is unlikely to affect output.

The talks between the Norwegian Shipowners' Association (NSA) and the Safe, Industri Energi and DSO unions will resume at a later date under the leadership of a state-appointed mediator, and could end in a strike if those negotiations fail.

Any industrial action would be unlikely to impact production of oil and gas in the short-term, but could have a greater impact in the longer term as expansion projects and the start-up of new fields could be delayed.

Norwegian petroleum production workers, who are directly employed by companies such as Equinor and ConocoPhillips, reached a wage agreement earlier this month, preventing strikes at major oil and gas fields.

The drilling workers, who negotiate separately from those directly involved in production, last went on a strike in 2018, affecting about 0.5% of Norway's combined oil and gas output at the time.

'Not acceptable'

Companies affected by the talks include Transocean, Saipem, Odfjell Drilling, Archer, Seadrill and others.

Labour unions, representing workers on mobile offshore units as well as platform drilling on permanent installations, had sought a pay increase that improved their purchasing power, Safe said.

"The offer on the table was not acceptable to our members," Safe leader Hilde-Marit Rysst said in a statement.

The Norwegian government earlier this month predicted consumer prices will rise by 5.4% this year.

The NSA, representing rig companies, said unions had failed to take into account the market prospects for the drilling industry.

"They wouldn't accept an offer that was in line with other parts of the industry," NSA chief negotiator Geir Sjoeberg said in a statement.

Under Norway's tightly regulated collective bargaining system, workers are only eligible to go on strike if the mediation also fails.