Strike cuts Norwegian oil, gas output
BY KJETIL MALKENES HOVLAND
OSLO--A Norwegian oil workers' strike has shut down 240,000 barrels a day, or 15%, of the country's oil production, and 11.9 million cubic meters a day, or 7%, of its natural-gas output, the Oil Industry Association told Dow Jones Newswires Wednesday, a significant cut which could push oil prices upwards.
The strike was launched Sunday, due to a disagreement about an early pensions deal. Some 700 oil workers on four different offshore installations, including the Heidrun and Oseberg platforms, are now striking.
Unions will consider Friday whether to expand the strike, a move which would take effect July 3.
"The companies' losses are now 201 million kronor ($33 million) per day," Oil Industry Association spokeswoman Eli Ane Nedreskar told Dow Jones Newswires. "That means that the companies have lost NOK744 million since the strike began Sunday. Friday night we will reach NOK1 billion."
The strike has affected the Norwegian oil giant Statoil ASA (STO) the most. The company said Tuesday it had to shut down four new installations and that it was losing NOK150 million a day.
Offshore unions said that no new negotiations were planned for now, and that they haven't heard from the Oil Industry Association, which has denied discussing pensions as part of wage agreements.
"No, nothing at all. But we haven't been going on for that many days yet," said Leif Sande, leader of Industri Energi, one three striking unions. "The longest strike ever in the oil sector lasted for 12 weeks. The longest one I've taken part in lasted for five weeks."
The Oil Industry Association said out of the oil companies' losses, NOK148 million a day was due to production shut downs. About NOK50 million was due to other costs, such as a delay in the work on the BP PLC (BP)-operated Skarv floating production and storage unit, which is set to produce from the fourth quarter, and costs related to the shutdown of Statoil's west coast Tjeldbergodden methanol plant.
The strike is shutting down production on the Norwegian continental shelf only a few days before the European Union launches an oil embargo against Iran on July 1, and could add upwards pressure to the oil price, which earlier this month fell below $90 from around $130 in March, but turned somewhat upwards Tuesday.
"If [the strike] lasts for a while, it could have an extra effect here in Europe, especially due to the upcoming embargo," said Nordea analyst Thina Saltvedt.
For now, the strike has stopped production at Oseberg, Oseberg East, Oseberg South, Heidrun, Huldra, Veslefrikk and Brage.
The total oil and gas production from these fields equaled 391,127 barrels a day in March and 290,663 barrels a day in April, according to figures retrieved from the Norwegian Petroleum Directorate's oil field database.
Production numbers can vary significantly from month to month, due to maintenance and price considerations.
The government of Norway doesn't comment whether it will take action to stop the strike, or what it takes for it to ask Parliament to impose compulsory arbitration, in which a committee forces the parties into an agreement.
The Norwegian government has been criticized by the International Labor Organization for curbing workers' right to strike on previous occasions, and is likely to be reluctant to end the strike as long as people's life and health is not in danger.
Dow Jones Newswires