The government of Norway has ended a 16-day strike against offshore oil and gas producers and killed the threat of an industry lockout that was set to begin at midnight last night. The labor minister said the decision was made to end the strike and potential lockout to protect the “vital interests” of the country. The government owns the controlling interest in Statoil ASA (NYSE: STO), the largest producer in the offshore oil fields. Other firms with interests in the North Sea offshore Norway include 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).
The central issue in the strike had been the unions’ demand that workers be allowed to retire with full benefits at age 62 rather than the current 65. The Labor government waited until the very last minute to invoke its power to end the strike, presumably hoping to avoid offending its main constituency.
A lockout would have cut 2 million barrels/day of crude out of the market and a substantial amount of natural gas as well. Producers stood to lose as much as $300 million/day if the lockout had occurred.
The issues that led to the strike will now be heard by an arbitration panel. By threatening a lockout, the producers threatened not only the Norwegian government’s royalty earnings, but also the country’s reputation as a dependable supplier. Norway has never allowed a strike or lockout to stop offshore production and the producers wagered that it would not do so in this case. That was a sure bet.