Norwegian oil exports threatened by growing strike in the sector

Monday, 09 July 2012

All Norwegian production of oil and gas is likely to be stopped on Tuesday night if solution for a strike called is not averted.

Already, mediation efforts within the Norwegian oil sector has failed to reach a consensus between the warring strikers and their bosses over the weekend. The effect is likely to lead to a rising oil prices as a result.

"This has major implications for Europe," said Thina Saltvedt, an oil analyst at Nordea.

After two weeks of war of words, the Norwegian oil workers are set to go on strike which is set to cause a total outage of Norwegian oil and gas. On Monday, the world price of crude oil went up, after a big drop on Friday.

The driver is the persistent hardship for the relations between the Worker Union and their employers to attain any acceptable level of mutual agreement. This was more so evident over the weekend where negotiations between employers and unions in the Norwegian oil conflict again broke down.

Report hold that the parties did not come closer during this weekend's mediation and they do not currently have planned for a fifth mediation efforts.

"A production stop of all Norwegian oil and gas has major implications for Europe. Norway is the world's fifth largest oil exporter and the largest in Western Europe. It exports 1.5 million barrels of oil to Europe every day, accounting for 20 percent of gas exports. This loss is as great as that which occurred in connection with the conflict in Libya last year, "said Thina Saltvedt, an oil analyst at Nordea in Oslo.

Since 24 June, the strike has compromised the production of 250 000 barrels of oil a day. From midnight on Tuesday night, there could be the cessation of all of Norwegian oil production.

"For Statoil this would mean a loss of revenue of Skr520 million per day. So far, the strike has cost Skr150 million per day, "said Statoil's CIO Glad Pedersen to Norwegian business news site e24.no.

Thina Saltvedt believe that if the lock down is carried out it would not be possible to be prolonged. She argues that the political situation and the oil embargo against Iran makes the Norwegian authorities not afford a long strike.

"The authorities can intervene and impose a solution. I think if they do not do it they risk of putting the economy in danger, "she says.

The conflict centers on whether the workers in the Norwegian oil rigs will have their retirement age lowered from 65 years to 62 years. The unions believe that they negotiated for that right in 1998 but it was never part of the collective agreement. Employers Organisation for the Norwegian oil industry, OLF, has said no to this pension plan, which led to 708 people to go out on strike on June 24.
by Scancomark.se Team

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