OSLO (REUTERS, AFP) – Europe’s energy worries accelerated on Tuesday (July 5), as Norwegian offshore oil and gas workers went on strike over pay, in a move that could see the country’s gas exports cut by almost 60 per cent.
The strike has already already closed three fields, and threatens to exacerbate supply shortages in the wake of the Ukraine war.
“Almost 60 per cent of gas exports from the Norwegian continental shelf (NCS) will be affected when the strike action is stepped up further from Saturday,” the Norwegian Oil and Gas Association said in a statement.
The strike comes at a time when energy prices have already soared as a result of the impact of Russia’s invasion of Ukraine and associated sanctions.
Oil and gas from Norway, Europe’s second-largest energy supplier after Russia, is in high demand as the country is seen as a reliable and predictable supplier, especially with Russia’s Nord Stream 1 gas pipeline due to shut for maintenance from July 11 for 10 days.
“Norwegian deliveries account for a quarter of European energy supplies, and Europe is entirely dependent on Norway delivering as a nation at a time when Russian supply cuts have created a very tight market for natural gas,” the association said.
“A strike on this scale poses huge problems for countries which are wholly dependent on filling up their gas stores ahead of the autumn and winter,” it added.
Workers walked out after members of the Lederne union voted no to a proposal brought by mediators during wage negotiations.
Earlier on Tuesday, Norwegian energy giant Equinor said it had shut down production at three oil and gas fields after oil workers walked out following failed wage negotiations, and warned that more closures were expected.
Members of the union are senior staff members, considered crucial to operations, and among the best-paid employees working offshore.
The government can intervene to stop any strike in exceptional circumstances.
In the past, such powers have been used to end petroleum sector strikes to protect Norway’s reputation as a reliable gas supplier to Europe.
The last time such intervention was made was in 2020.
However, the Norwegian Labour Ministry told Reuters on Tuesday it had no comment on the ongoing conflict.
“In accordance with how wage disputes are resolved in Norway, it is the social partners’ responsibility to find a solution to any conflict,” Deputy Labour Minister Maria Schumacher Walberg said in a statement to Reuters.
Union leader Audun Ingvartsen told Reuters the escalation was not designed to pressure the government to intervene and impose a settlement, adding that he had not been in touch with the government.
“Our goal is that employers engage with us and listen to their employees,” he said.
The three fields Gudrun, Oseberg South and Oseberg East, have a combined production of “around 89,000 barrels of oil equivalent (boe) per day, of which 27,500 boe per day is natural gas,” oil giant Equinor said in a statement.
According to the Norwegian Oil and Gas Association, the extension of the strike to all the fields announced by the union would mean that “daily oil production of 341,000 barrels and gas exports of 1,117,000 boe per day are lost,” which corresponds to about 56 per cent of total gas exports from the NCS.