A strike by oil workers in Norway could cut output from western Europe’s biggest oil and gas producer by almost a quarter, operators said Oct. 8, though the striking union said a resolution was possible.
Widening strike action raised the prospect of further price rises on the international oil market as benchmark Brent crude traded up 1.5% on Oct. 8.
News about the strike has helped to keep Brent above $42 per barrel in recent days.
Norway’s government, which can intervene if a strike is considered a national emergency, said it was up to the two sides to resolve their differences.
“Strike is a legitimate measure,” The Ministry of Labour and Social Affairs said in an emailed statement to Reuters, adding it was monitoring the situation.
In 2012, the Norwegian government invoked its powers to end an oil industry conflict after 16 days, when employers threatened a lockout of workers that would have shut down Norway’s entire oil and gas output.
The parties exchanged proposals Oct. 7 and will discuss them Oct, 8, the striking union said.
“I think, we have a plan, and it can be solved in two steps,” Lederne union chief Audun Ingvartsen told Reuters.
“We can look into ways how to solve it for the short term, and then we can go back to it later ... There is still time to reach the agreement.”
The dispute began on Sept. 30 when wage talks between the Lederne union and the Norwegian Oil and Gas Association (NOG) collapsed, triggering production outages on Oct. 5.
The union wants to match the pay and conditions of workers at onshore remote-controlled rooms with those of offshore workers, as well as have a higher wage rise this year than proposed by oil firms.
Six offshore oil and gas fields shut down on Oct 5 as Lederne ramped up the strike, cutting output capacity by 8%, or around 330,000 barrels of oil equivalent per day (boe/d), the NOG said.
“If there is no deal, of course, we will escalate the strike,” Lederne's Ingvartsen said.
U.S. producer ConocoPhillips said on Oct. 8 it would shut its 2/4 B platform on Oct. 10, with output of 7,000 boe/d, one of eight offshore facilities at the giant Ekofisk Field.
Another seven oil and gas fields could be fully or partly shut by Oct. 14, including the Ekofisk platform and Wintershall Dea’s Maria oil field, the industry said.
A water injection platform which helps to sustain well pressure at Ekofisk is also set to close, ConocoPhillips said.
The biggest outage would be at Equinor’s Johan Sverdrup oil field, the North Sea’s largest with an output capacity of up to 470,000 barrels per day, which would shut on Oct. 14, Equinor said Oct. 7.
In total 966,000 boe/d are expected to go offline.
Of the fields that have closed, nearly 60% of the total cuts were natural gas, with crude oil and NGL making up the rest, a Reuters calculation based on official Norwegian output data showed.
But the shutdown of Sverdrup, which began production a year ago, would heavily tilt the balance of cuts toward crude oil.
The strike is cutting Norwegian gas exports by 35 million cubic meters per day (MMcm/d), Refinitiv analysts said in a note.
“The addition of four more fields (Oseberg South, Osberg East, Ekofisk and Kristin) to industrial action could increase that impact to around 42 MMcm/d when looking at the recent output of said fields.:
The strike would also hit the fourth-quarter earnings of oil companies, with Equinor, Aker BP and Lundin Energy likely to see reduced income per share of 4-6% in the case of a 10-day strike, brokerage Sparebank 1 Markets said.
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