Norwegian oil strike escalates; production reduced
OSLO, Norway — A strike at an offshore oil field escalated Wednesday, raising fears that flows from the world’s third-biggest oil exporter could dry up just as global demand is holding prices high. An industry executive described the conflict as “completely deadlocked.”
A Norwegian union said it would step up the strike further starting Monday, aiming to cut Norway’s daily production by 715,000 barrels and disrupt natural gas supplies to Britain.
Only Saudi Arabia and Russia export more oil than this Nordic nation, which has a daily production of 3 million barrels.
Employers said they were contemplating their options, which many fear could include a lockout that would virtually halt Norwegian production.
However, the Norwegian government has traditionally been quick to order an end to oil field strikes when exports crucial to the economy are threatened.
Crude prices, already high, rose only slightly on the news of the worsening labor conflict. Traders said that was partly because many buyers had adopted a wait-and-see attitude before committing themselves to such expensive oil.
Iraq, another important oil source, resumed exports Monday after repairs to a pipeline that had been sabotaged by insurgents, helping to cool off prices.
In a dispute largely over pensions and job security, the Federation of Norwegian Oil Workers and its smaller ally, Lederene, ordered a strike by 207 workers on June 18.
Another 16 workers were set to shut down a platform late Wednesday, bringing the total loss in production to 455,000 barrels per day, about 15 percent of Norway’s output.
The union also announced Wednesday that roughly 100 more members would strike Monday, cutting oil production by another 260,000 barrels per day.
It said the expanded strike would target the Heimdal field, operated by Norsk Hydro ASA, and the production ship Norne, operated by Statoil ASA. The strike has already hit fields operated by Statoil, ConocoPhilips and Exxon Mobil.
The strike at the Heimdal field would also reduce natural gas sent to Britain by pipeline by about 107,000 cubic feet per day, according to the Norwegian Oil Industry Association.
“The strike situation on the Norwegian continental shelf is extremely serious, it is completely deadlocked, and we are evaluating the situation continuously,” said Per Terje Vold, managing director of the association.
Earlier in the day, Tom Gedero, a spokesman for the association, said a lockout was being considered. The association later played down that threat.
The total impact on production by Monday could be greater than the 715,000 barrels per day now estimated if it also disrupts smaller satellite fields linked to platforms idled by the conflict.
Terje Nustad, leader of the federation of unions, said they wanted to escalate the strike to make oil companies feel the economic sting, but not enough for the government to order binding arbitration, which would end the conflict.