Norway's government steps in to end oil and gas strike

Workers walked out after rejecting a proposal brought by mediators during wage negotiations

Workers walked out on Tuesday, leading to the closure of three fields, and the union announced more workers would strike later in the week. AFP
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The Norwegian government has intervened to end a strike by oil and gas workers.

The dispute with employers was referred to an independent board after an industry group said the strikes could cut Norway's gas exports by more than half.

It ends a stalemate that could have worsened Europe's energy supply crunch.

Workers walked out on Tuesday, leading to the closure of three fields, and the union announced more workers would strike later in the week.

“The announced escalation is critical in today's situation, both with regards to the energy crisis and the geopolitical situation we are in with a war in Europe,” Labour Minister Marte Persen said.

“Norway plays a vital role in supplying gas to Europe, and the planned escalation [of the strike] would have had serious consequences for Britain, Germany and other nations.

“The volume impact would have been dramatic in light of the current European situation.”

Lederne union leader Audun Ingvartsen said workers would return to work “as soon as possible”.

“We are cancelling the planned escalation,” he said. Asked whether the strike was over, he said: “Yes”.

Under Norwegian legislation, the government can force parties in a labour dispute to a wage board, which will decide on the matter.

Earlier on Tuesday, the Norwegian Oil and Gas Association, an industry group, said the announced escalation of the strike scheduled for Saturday would slash output.

It said 56 per cent of total gas exports from the Norwegian continental shelf would be cut, apart from a production loss of 341,000 barrels of oil a day.

In a worst-case scenario, Belgium and Britain would not have received any piped Norwegian gas from Saturday, gas pipeline operator Gassco had said, because of the risk of a shutdown at Sleipner, a gas transport centre in the North Sea.

Oil and gas from Norway, Europe's second-largest energy supplier after Russia, is in high demand as the country is considered to be a reliable and predictable supplier, especially with Russia's Nord Stream 1 gas pipeline due to be shut down for 10 days from July 11 for maintenance.

The British wholesale gas price for day-ahead deliveries rose by about 16 per cent on Tuesday, although the price of Brent crude fell as fears of a global recession outweighed concerns about supply disruptions, including the strike in Norway.

“It is unjustifiable to allow gas production to stop to such an extent that this strike in the next few days is estimated to lead to,” Ms Persen said.

Earlier on Tuesday, Norwegian energy company Equinor said it had shut down production at three oil and gasfields after oil workers walked out due to failed wage negotiations. The company said more closures were expected.

The strike came at a time when energy prices have fluctuated as a result of the impact of Russia's invasion of Ukraine and associated sanctions.

“Norwegian deliveries account for a quarter of European energy supplies, and Europe is entirely dependent on Norway delivering as a nation at a time when Russian supply cuts have created a very tight market for natural gas,” said the Norwegian Oil and Gas Association.

“A strike on this scale poses huge problems for countries which are wholly dependent on filling up their gas stores ahead of the autumn and winter,” it said.

Workers walked out after members of the Lederne union rejected a proposal brought by mediators during the wage negotiations.­

As with other workers elsewhere, Lederne union members had been concerned about the effects of accelerating inflation on their wages, despite them being among Norway's best-paid offshore employers.

Last week, they turned down a pay rise of between 4 per cent and 4.5 per cent that was negotiated by union leaders and oil companies. Inflation in May stood at 5.7 per cent, year on year.

Under the forced settlement by the government, workers will receive the same terms as the two other oil unions that negotiated deals with employers, although the specifics will be agreed at a later stage, said Ingvarsten, the union leader.

Updated: July 06, 2022, 10:55 AM