Norwegian oil rig strike poised to escalate

Strike hasn’t affected production because only drilling targeted

The Associated Press

As a strike by Norwegian offshore oil rig workers dragged into its second month, employers were set to retaliate with a lockout planned for Sept. 2.

The Norwegian Federation of Oil Workers Unions, or OFS, began a strike by about 200 workers on July 2, shutting down several mobile drilling rigs after failing to settle a new contract.

Since the rigs drill wells, rather than produce petroleum, the strike has had no impact on the Norway’s production of 3 million barrel per day, which makes the Scandinavian country the world’s third largest oil exporter.

With the conflict deadlocked, the Norwegian Shipowners Association, representing the employers, announced in mid-August it intended to lock out another 300 OFS members at midnight Sept. 2 unless a settlement was reached.

Most of those also work on drilling rigs, although the shipowners called for a lockout on the Petrojarl I production ship, which produces about 30,000 barrels a day for the Norwegian state oil company, Statoil.

For safety reasons it can take 10 days or more from the start of the lockout to shut down the rigs. If the strike drags on, it could delay scheduled new production wells and thus reduce Norway’s planned output.

The government has the power to order the strikers back to work, but that was unlikely since the conflict does not seriously threaten daily production.

Both sides said they were prepared for a further escalation, with the union saying it was braced for a long strike.

“There are a total of 850 OFS members, and we could lock them all out,” the shipowners association’s director of communications, Marit Ytreeide, told Dow Jones Newswires.

The union also threatened to escalate the conflict if there was a total lockout.

“We’re prepared to hold out past Christmas if we have to,” said OFS deputy leader Bjoern Tjessem. “And we could take out more (vessels).”

Norwegian labor law requires a two-week notice of strikes or lockouts, or an escalation of either.

The union said the conflict was mainly over its demand for job security for members. The employers said, however, that the union also demanded current contracts cover workers on platforms temporarily in Norway for repairs.

The shipowners association says the rig industry cannot afford to meet the union demands, since it already costs 250,000 kroner (US$35,700; euro29,000) more per day in personnel expenses to operate a rig in Norwegian waters than in the British sector of the North Sea.