Norway Prepares to Lockout Offshore Oil Field Workers
An association representing oil companies working on Norway’s continental shelf is preparing for a lockout against striking workers beginning at midnight tonight. If the lockout is enforced, about 6,500 workers will be affected and oil production totaling about 2 million barrels/day would be shut in.
A lockout would affect Norway’s state-controlled oil company Statoil ASA (NYSE: STO) the most, but other producers including Total SA (NYSE: TOT), Eni SpA (NYSE: E), Royal Dutch Shell plc (NYSE: RDS-A) and (NYSE: RDS-B), BP plc (NYSE: BP), Chevron Corp. (NYSE: CVX), ConocoPhillips (NYSE: COP), and Exxon Mobil Corp. (NYSE: XOM) would also feel the effects. Oil field services companies like Halliburton Co. (NYSE: HAL) and Schlumberger Ltd. (NYSE: SLB) could also feel some effects from a lockout.
Workers have been on strike against the producers since June 24th, primarily over the issue of retirement age. The unions want the age lowered from 65 to 62 and would pay for the early retirement costs out of union funds. The producers reached a wage agreement with the unions last summer.
A market researcher in Norway told The New York Times, “It [the strike/lockout] will end in forced arbitration — it always does.” Norway does not want to lose its reputation as a reliable producer, and the government typically steps in when matters reach a crisis point.
In addition to its crude oil production, Norway’s offshore fields also produce about 20% of Europe’s natural gas. That production would also be closed down in the event of a lockout. It’s difficult to predict the impact on Europe’s economy, where demand for petroleum and natural gas is already weak due to concerns over the continent’s entire economy.