Norway oil strike into second week, unions to meet Tuesday

OSLO Sun Jul 1, 2012 10:26am EDT

A logo of Statoil is pictured at a petrol station in Warsaw February 5, 2012. REUTERS/Kacper Pempel

A logo of Statoil is pictured at a petrol station in Warsaw February 5, 2012.

Credit: Reuters/Kacper Pempel

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OSLO (Reuters) - A strike by offshore workers in Norway's oil sector entered its second week on Sunday with labor unions bracing for a long conflict and possible escalation to further lower output from the eighth largest oil exporter.

Operator Statoil (STL.OL) said the strike had cut production of oil and natural gas liquids by 230,000 to 250,000 barrels per day, or up to 13 percent of Norway's capacity. Some natural gas output has also been affected.

Unions representing about 7,000 offshore workers on the Norwegian continental shelf, decided on Friday to refrain from escalating the strike to avoid intervention by the government, and to give more time for employers to return to negotiations.

But both the Industri Energi and SAFE trade unions said on Sunday there had been no fresh contact with the Norwegian oil industry association (OLF) so far.

"It's easy to make a phone call, but so far there were no contacts from the OLF," Hilde Marit Rysst, head of the SAFE union said.

"We thought we would give them more time to contact us before we meet again on Tuesday, because they have said the strike was hurting them so much," she added.

Unions are demanding wage increases, better overtime pay and the right to retire at 62, but the OLF has refused to negotiate pensions. <ID:L5E8HG40H>

The OLF was not available for comment, but said on its website on Friday that the unions' decision not to escalate showed they lacked the stomach to strike.

Leif Sande, the leader of labor union Industri Energi, which represents more than half of the offshore workers, said the situation was the opposite.

"I think it can be a very long strike, unless employers use a lockout or the government intervenes," he told Reuters.

Employers have the option of a lockout, which would threaten a full shutdown of all oil and gas production and virtually guarantee government intervention.

The government has powers to call an end to the dispute if it believes safety or national interests are at stake, as the sector accounts for a fifth of gross domestic product and nearly half of Norway's exports.

But the government has so far said it does not have plans to intervene.

Asked if the labor unions might escalate the strike, Sande said:

"We might escalate, but I don't think we will go as far as stopping all gas production, though it could be affected a little bit more.

He declined to say how much more.

Union leaders said they would meet again on Tuesday morning to review the situation.

Under Norwegian law, an escalation of the strike could only come into effect four days after any decision is made.

The strike, which started last Sunday, initially shut down production at the Oseberg and Heidrun fields in the North Sea.

On Tuesday, Statoil halted production at another three fields, saying the strike at Oseberg had affected oil transportation to an onshore export terminal.

About 4 percent of total gas production has also been cut, but Norwegian gas flows to Europe were not affected significantly, data from gas system operator Gassco showed.

Gas flows via Vesterled pipeline to Britain have been completely shut since 0800 GMT on Friday, but that took away only 3 million cubic meters (mcm) of gas per day.

Exports to Britain via the FLAGS gas pipeline were also completely shut from 0400 GMT till 1100 GMT on Saturday, but have recovered to weekly average levels of about 20 mcm per day since.

Gassco did not provide any explanation for the disruptions, and it wasn't immediately clear whether this was a result of the strike or planned maintenance. (Reporting by Nerijus Adomaitis; editing by Jason Neely)

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