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Threat to lock out striking Norwegians could hurt oil prices

Nearly all of Norway's oil production of 3 million barrels a day could be pulled off the market next week if oil companies and striking unions follow through on threats to escalate their weeklong labor conflict.

ExxonMobil, Royal Dutch/Shell, Statoil and a half dozen other oil companies warned on Thursday that they would lock out thousands of offshore oil workers by midnight Monday if the unions do not call off their phased-in strike and withdraw demands relating to pension plans and part-time employment.

Employers, union leaders and analysts agreed that a lockout of the unionized platform workers would effectively shut down oil and natural gas production on the Norwegian continental shelf and ripple through global markets.

"The current situation could have significant repercussions for an already tight oil market," said Wood Mackenzie, an international energy consulting company, in a statement on Thursday.

Norway is the world's third-largest exporter of crude oil, behind Saudi Arabia and Russia, according to the Norwegian Petroleum Directorate. It also supplies some 11 percent of the natural gas used for power generation and heating in Europe.

"The oil companies and the organization that represents them are behaving in a way that weakens Norway's reputation as a secure oil and gas supplier," said Terje Nustad, head of the Federation of Oil Workers' Trade Unions. "It's irresponsible."

But Norway's platform workers are already among the best-compensated in the world. In Norwegian waters, workers with some degree of responsibility earn on average about US$70,000 a year, and everyone gets four weeks of vacation for every two weeks worked, according to the Norwegian Oil Industry Association, which represents the oil companies.

Some 200 members of two unions had left their jobs by Thursday, causing a reduction in production of nearly 500,000 barrels of oil a day.

Two unions have threatened to expand the strike tomorrow night, removing an additional 200,000 or more barrels a day from production, if their demands are not met. They want the oil companies to make permanent the existing pension plan, which allows workers to retire at age 62 with two-thirds of their salary, and to offer temporary workers full-time jobs.

"We simply cannot do it," said Per Terje Vold, director-general of the association. "It would lock in an already stiff labor structure and make it even stiffer."
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