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Norway oil workers’ strike accelerates, drillers fear contract losses

Staff Writer | July 17, 2018
A strike by Norwegian offshore oil and gas workers accelerated on Monday when hundreds more walked out in a dispute over pay and pensions after employers failed to respond to union demands for a new offer.
Norwegian offshore
Oil exploration   A further 900 workers went on strike
The strike, which began last Tuesday, has had a limited impact on Norway’s oil production so far, but some drillers warned of possible contract cancellations if the dispute goes on for a month or more.

A further 900 workers went on strike on Monday, joining almost 700 who walked out last week, and the Safe union said it would consider in the next few days whether to widen the strike to all of its 2,250 members.

Safe went ahead with its plan to expand the strike after employers did not respond to its demands for higher wages and pension benefits by a midnight (2200 GMT) Sunday deadline.

The expanded strike was not expected to have any immediate extra impact on oil or gas production beyond the closure last week of Shell’s Knarr field, which produces 23,900 barrels of oil equivalent per day.

Norway’s biggest oil producer Equinor said it did not expect its output to be affected “in the short term” due to the escalation of the strike.

“More drilling and well operations are affected. We will get delays … In the short term we do not see any production or milestone consequences,” said Equinor spokesman Eskil Eriksen.

He declined to comment on what the company considered “short term” and what the long-term consequences would be.

It is the biggest strike in Norway’s oil sector since 2012, but has involved a relatively small number of workers. Norway’s oil industry directly employed 50,700 workers in 2017, around half of whom worked in production, according to Statistics Norway.

There has been no contact between employers and the union since the strike began last Tuesday after Safe rejected a proposed wage and pension deal.

Employers, represented by the Norwegian Shipowners’ Association, said on Monday that the union “lacked understanding of the economic reality of the Norwegian continental shelf”.

One of the drilling companies affected, Odfjell Drilling , warned of financial losses and of contract cancellations if the strike lasts “a long time”.

“There will be a financial loss, yes. We have mechanisms in the contracts to compensate, but if it lasts a long time consequences will be serious,” CEO Simen Lieungh told Reuters, without specifying a time span.

“Contracts could be terminated,” he said, mentioning contracts with Equinor and Aker BP.

Contract terminations is a concern for other drillers too, according to lead negotiator Jacob Korsgaard.

“It is a real concern that increases every day,” he told Reuters. Asked whether the strike could lead to contract cancellations if it were to last more than a month, he said: “Definitely.”