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Government intervenes to prevent Norway oil industry shutdown

10 July 2012

Norway's government ordered a last-minute settlement in a dispute between striking oil workers and employers to prevent the complete closure of its oil and gas industry. Employers were set to implement a total lockout of 7,000 offshore workers at midnight on July 9 in a bid to end the strike called by unions to press for early retirement for oil workers.

Statoil's Oseberg C platform was one of the worst-affected by the three-week strike
Statoil's Oseberg C platform was one of the worst-affected by the three-week strike

A few minutes before the deadline, Norwegian Minister of Labour Hanne Bjurstrøm informed both parties the government would propose to Parliament that the conflict be resolved by compulsory arbitration. All parties were required to resume work as soon as possible. 

Earlier, the Minister said she believed the lockout was not necessary and the oil industry would have to take responsibility for its actions.

About 10 percent of the 7,000 offshore workers, members of the SAFE and Industri Energi trade unions, have been on strike since June 24.

Bjurstroem said her main concern was the potential cut in gas supplies. Norway is the world's second-biggest gas exporter by pipeline, with the majority of supplies going to Britain, the Netherlands, France and Germany.

But the Government was slow to intervene in the latest dispute, which was in its third week, and only did so at the last minute because of the serious potential economic consequences for the country and its reputation as a reliable supplier of energy products.

Observers said the Labour-led coalition government held back because it faces general elections in a year, and the unions are important partners.

A full closure of output in Norway - the world's eighth largest oil exporter - would have cut off more than two million barrels of oil, natural gas liquids (NGL) and condensate per day.

According to Reuters, Leif Sande, leader of the Industri Energi union, said workers felt betrayed, but he nonetheless called on his members to resume work immediately.

"With this decision we can see that whenever the oil industry says jump, the government listens," Hilde Marit Rysst, head of the SAFE union, told Reuters. "We will never leave this issue - it is completely unthinkable to stop fighting for those who are worn out at 62."

"I am very happy that the minister chose to end a conflict that has cost Norway and the oil companies large sums," said Gro Braekken, leader of the OLF. The organisation said the 16-day strike lost some 3.1 billion Norwegian crowns ($509 million) altogether.

The union case has not received much public support in Norway, given that oil and gas workers are already the world's best paid, making an average $180,000 a year. But they say tough conditions make it imperative their retirement age is reduced from 65 to 62. The retirement age for most other occupations in Norway is 67.

The next step is compulsory arbitration to define a new wage and retirement agreement.

The strike had halted production of oil and natural gas at the Oseberg and Heidrun fields in the North Sea, resulting in a loss of some 240,000 barrels of oil and 11.9 million cubic metres of gas, according to OLF.

State-controlled Statoil, which operates the affected fields, said it would resume production immediately and would be back at full capacity by the end of the week.

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