Bloomberg News

Norway Oil, Gas Output Threatened as Government Strike Expands

May 29, 2012

The escalating government workers’ strike is threatening to hamper Norway’s oil and gas exports and may leave some petrol stations in the capital empty within days.

The number of striking workers will tomorrow double to about 47,900 from the initial 24,000 taken off last week, according to figures provided by four unions. Talks broke down on May 24 over the government’s wage increase offer, triggering the first strike of public workers in two years.

Previously unaffected oil refineries and gas processing plants will be hit when all pilot boats in the country are taken out of service. The disruption in deliveries may eventually spill over to both oil production and exports, said Morten Eek, a spokesman for Statoil ASA (STL), Norway’s largest oil company.

“If it’s prolonged, it could have financial consequences for the companies involved and the government,” Eek said by telephone. While it wasn’t possible to estimate the timing or scope of possible disruptions to exports or production, Eek said that storage capacity is limited and “if you don’t get anything out, that would pose challenges.”

A strike of 103 of Norway’s 116 pilot boat crew members will affect mainly Statoil’s Mongstad oil refinery and terminal and the Kaarstoe gas processing plant, Eek said. Mongstad has an average capacity of 27,400 tons of oil a day, and the Kaarstoe plant has a capacity of 88 million cubic meters of gas a day, according to Statoil’s website.

Sea Shipments

Eek said the strike would cancel about 30 boats at the facilities during the week starting tomorrow. He didn’t provide details of the volumes involved. While pipeline deliveries are unaffected, Mongstad receives some oil by sea and also ships out refined products. Kaarstoe ships out condensate, liquefied petroleum gases and ethane.

Ships longer than 70 meters or carrying dangerous materials are required to have a pilot on board when navigating in and out of Norwegian harbors, said YS union representative Narve Leonhardsen in a phone interview.

A pilot strike in the Oslo area since May 24 has already caused a halt in all transport of refined products to the Sjursjoeya terminal, which supplies 40 percent of Norway’s gasoline stations, Statoil spokesman Paal Heldaas said.

Gas stations in Oslo, Norway’s biggest city, were in a “precarious” situation and would start running out of gas by the end of the week if the strike continues, he said.

Unions Fagforbundet, LO, YS and Unio representing workers in both the state and municipalities went on strike May 24 because the government proposed a pay increase of less than 4 percent. Fagforbundet is the first union to step up the strike today with 14,700 new workers, up from 9,500 the week before.

There were 793,000 public employees in 2011, or 30 percent of the workforce, according to the bureau of statistics.

To contact the reporter on this story: Mikael Holter in Oslo at mholter2@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net


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