Labour Ministry intervenes at the last minute in a dispute between union workers and employers
12 July 2012
The International Energy Agency’s July Oil Market Report (OMR) estimates that the recent strike in Norway between oil and gas industry union workers and employees is likely to curb the country’s oil production by almost 150 thousand barrels per day (kb/d) in June and by 180 kb/d in July.
Compared with May, and taking into account other seasonal maintenance, Norway’s oil production in July is expected to fall by 0.4 million barrels per day (mb/d) to around 1.6 mb/d, according to the OMR. That is the lowest level from Norway’s Continental Shelf (NCS) since August 1991, when the Sleipner oil and gas platform in the North Sea sank, causing a seismic event that registered 3.0 on the Richter scale.
Norway is the world’s seventh largest oil exporter, producing around 2.0 mb/d in 2011 – roughly equal to the amount consumed in France every day.
Workers went on strike in mid-June over demands from trade unions for an early retirement scheme from the age of 62. In addition, the Norwegian Oil Industry Association then announced a lockout of all 6,515 workers to take effect from midnight on 9 July that would have halted all offshore oil and gas production in the NCS for the first time in 26 years.
Norway’s Labour Ministry, however, intervened at the last minute, stressing that such an outage would have threatened Norway’s reputation as a reliable supplier of gas to Europe and oil to world markets.
“The Labour ministry also cited the economic consequences of a shutdown on Norway’s economy, with the offshore oil and gas industry accounting for 21% of GDP and almost half of Norway’s exports,” stated the OMR.
In addition to the strike, unplanned outages at Norway’s Gullfaks, Snorre and Ormen Lange oil fields are also reducing output. However, Norway’s Skarv field, new drilling at Ekofisk and Eldfisk, as well as Valhall and Norne should sustain Norway’s oil production at 1.8 mb/d in 2013. This is around 3% – or 60 kb/d – lower than production in 2012.
The Oil Market Report (OMR) is a monthly IEA publication which provides a view of the state of the international oil market and projections for oil supply and demand 12-18 months ahead. To subscribe, click here.