Norway faces oil output shutdown as pension talks fail
Norway is the world’s fifth-largest oil exporter
9 July 2012 Last updated at 21:38
Oil and gas production in Norway will be shut down from Tuesday because of a dispute over pensions, a government minister has confirmed.
Energy companies announced they would lock out workers from late on Monday after talks to try to end the fortnight-old strike broke down for a third time.
The industry had hoped the move would force the government to use its emergency powers to end the strikes.
Oil prices rose on the news.
In London, Brent crude jumped more than $2 to above $100 a barrel, before dropping back slightly.
Norway’s three main unions have been on strike for 15 days. The dispute is over offshore workers’ demand for the right to retire early, at 62, with a full pension.
“As the situation stands now, the lockout will be enforced from midnight (2200 GMT Monday),” petroleum and energy ministry spokesman Haakon Smith-Isaksen said.
The government possesses emergency powers giving it the right to force an end to a strike if it believes that safety is being compromised or national interests are being harmed.
Norway, the world’s fifth largest oil exporter, has already seen its oil production cut by 13% and its gas output by 4% since the strikes began on 24 June. OLF estimates this has cost Norway 2.9bn (£300m) kroner in lost production.
Jan Hodneland, chief negotiator at the Norwegian Oil Industry Association said talks had failed despite over 13 hours of negotiations.
OLF said it now sees no option other than to lock out all 6,515 oil and gas workers covered by offshore pay agreements from their workplace from Tuesday.
“Oil company employees have an average annual income of 1m Norwegian kroner (£105,000) and a retirement age of 65. This already makes them Norway’s pension winners. They’ve nevertheless opted to use their power to win even better terms,” said Mr Hodneland.
“We’re living longer, so we’ve also got to work longer,” he added.
State-owned energy company Statoil, a member of OLF, said the lockout “will halt all production” on Norway’s continental shelf, where about 50 companies operate, including BP and Royal Dutch Shell.
Statoil said it expected a shortfall in production of around 1.2m barrels of oil per day, which it said would cost it 520m kroner per day.
The row between oil workers and employers centres on the elimination of a pension add-on introduced in 1998 for workers who retire at 62, three years ahead of the general age for oil workers and five years ahead of Norway’s official retirement age.