Norway Oil Workers Shut Platforms As Mediation Talks Fail

Norwegian offshore workers shut two platforms after mediated talks on pensions and wages failed, curtailing output in Europe’s second-largest crude and natural gas producer.

A government-led mediation was unable to bridge a divide over pensions with the labor unions, Industry Energy, Safe and Lederene, the Norwegian Oil Industry Association said today in an e-mailed statement. The talks had pushed past a midnight deadline before a strike was called.

“Completely unreasonable pension demands from Industry Energy, SAFE and Lederne show they are clearly placing themselves apart from other workers in Norway,” Jan Hodneland, chief negotiator for the association, said in a statement.

The strike will cut oil and gas output as shut production at Statoil ASA (STL)’s Oseberg and Heidrun fields, and close BP Plc (BP/)’s Skarv development, according to the group. About 700 workers are being taken off the job in the initial phase of conflict, which will also hurt operations at Europe’s biggest methanol plant.

“We can’t accept that the employers rob us of our pensions,” Leif Sande and Hilde-Marit Rysst, leaders at the Industry Energy and Safe unions, said in a separate statement.

The platforms will take four to five days to close, the industry association said. BP’s Skarv output start risks being delayed by the conflict, which will cost 150 million kroner ($25 million) a day in lost revenue, the group said.

Production Affected

The strike by oil-platform workers, which is the first industrywide action since 2004, targets about 165,000 barrels of oil equivalent a day, according to the Industry Energy and Lederne unions. That’s equal to about 3.9 percent of average daily production of oil, natural gas and condensate in Norway this year, according to Bloomberg calculations based on data from the Norwegian Petroleum Directorate.

Oseberg has produced an average of about 194,000 barrels of oil equivalent a day in 2012, while Heidrun’s output has averaged 64,000 barrels, according to NPD data. Skarv is due to start production in the fourth quarter according to BP.

All production will be halted at Heidrun while output from Oseberg will be cut by between 94,000 and 101,000 barrels of oil equivalent, Per Helge Oedegaard, an official with the Lederne union, said on June 18. Output from the 2,500 metric tons-a-day Tjeldbergodden methanol plant will also stop after a single day’s strike because gas supplies would halt, he said. The plant is Europe’s biggest, according to Statoil, which owns more than 80 percent of the facility.

Norway, the world’s third-richest nation per capita, last suffered an oil worker strike in 2006 when oil-service employees disrupted drilling for 34 days. Platform workers last went on strike in 2004, according to the Safe labor union, which is part of the action. The employers are represented by the Oil Industry Association.

Norway produced an average of about 2.01 million barrels of oil, natural gas liquids and condensate a day in May, according to the NPD. That includes average oil output of about 1.633 million barrels.