* Lockout to shut Norwegian oil production from July 10
* Statoil output seen hit by 1.2 mln boepd
* Analysts, traders expect government to intervene
* Govt says lockout is legal, not commenting on intervention
By Vegard Botterli and Nerijus Adomaitis
OSLO, July 5 Norway's oil industry moved to lock
out all offshore workers on the Norwegian continental shelf on
Thursday, aiming to get the government involved and put an end
to a near two-week strike that has hit crude exports and helped
push up prices.
While a lockout would mean a complete shutdown of oil and
gas production in Norway, the world's eighth-biggest crude
exporter, analysts expected the government to intervene, end the
strike and prevent a full closure.
"The conflict is deadlocked, and the demands are
unreasonable ... Unfortunately, we see no other course than to
notify a lockout," the Norwegian oil industry association (OLF)
said in a statement.
Some 6,515 workers covered by offshore pay agreements will
be locked out from their workplaces with effect from July 10.
The strike, which began June 24, has already slowed crude
exports, cut Norway's oil production by around 13 percent and
its gas output by around 4 percent. News of the lockout sent
Brent crude futures up to as high as $102.34 a barrel.
They were trading at $101.03 at 1458 GMT.
"The likelihood is that the strike will end sooner than
expected," Commerzbank analyst Carsten Fritsch said.
State-controlled Statoil said the lockout would
cause a production shortfall for the company of around 1.2
million barrels of oil equivalent (boe) per day and 520 million
Norwegian crowns ($86.6 million) in lost revenues per day.
The Norwegian government declined to say whether it would
intervene but called the lockout legitimate.
"A lockout is still a part of the legal strike. We are
continuing to follow the situation closely," Gro Oerset, senior
adviser at the labour ministry, told Reuters.
Several North Sea oil traders on Thursday were in agreement
in expecting the strike to end soon.
"It seems like Statoil is trying to get the government to
settle it," said one.
The government has the authority to force an end to strikes
if it believes that safety is being compromised or vital
national interests could be harmed and has done so in the past
to protect Norway's image as a reliable energy exporter.
Analysts expect the government to intervene. In 2004, it
intervened one day after the oil industry called a lockout.
"A repeat is likely, and if not there will be some SPR
(Strategic Petroleum Reserve) release, but the most likely
outcome is now a Norway government intervention,"
Switzerland-based Petromatrix energy consultancy said in a note.
The Labour-led coalition government has been reluctant to
intervene as it faces general elections in a year, and labour
unions are important partners.
"I can't imagine they can accept that the entire production
on the Norwegian shelf is shut down for even a minute," SAFE
trade union leader Hilde-Marit Rysst told Reuters.
No new talks are planned between the parties, the state
The International Energy Agency said on Thursday it was
monitoring the summer oil supply situation very closely.
"We really hope that the sides can reach an agreement by
Monday night in order to avoid a prolonged and more widespread
outage," IEA executive Maria van der Hoeven said in a webcast.
The strike initially shut production at the Oseberg and
Heidrun fields. Oseberg in particular is significant for oil
prices, because it is part of the North Sea Brent benchmark used
as the basis for many of the world's trades.
Oil traders said on Thursday the loading of Oseberg cargoes
would be delayed by at least a few days in July, although exact
loading dates were unclear because Statoil has not issued a
revised July export programme.
An Oseberg cargo scheduled to load on July 1-3 has yet to do
so, a source familiar with the matter said. The delay, as
reported by Reuters on Monday, was the first sign of an impact
of the strike on exports.
An August export plan for Oseberg was expected to be
released on Friday, but trade sources said this would not appear
until production resumed.
In an apparent expectation of business as usual, however,
Statoil on Thursday issued an August loading programme for oil
from its Troll field, scheduling a normal export rate. A trading
source provided a copy of the loading plan.
Wage talks broke down on June 24 after the OLF refused to
negotiate an early retirement scheme for the sector's 7,000
workers. A second attempt at reaching a deal
ended unsuccessfully on Wednesday over pensions.
Hays Oil & Gas said in a recent report Norwegian oil and gas
workers were the best paid in the world, followed by Australia,
Brunei and the Netherlands. They earn more than twice the
average salary of all countries surveyed and more than double
workers in Britain.
Harsh working conditions mean that offshore workers, in
particular, are among the best paid industrial workers in
Norway. Their 12-hour shifts last for two weeks and are followed
by four weeks of leave, making for a total of 16 weeks of work a
year, excluding overtime.
But the main sticking point for unions is an early
retirement age for offshore workers of 62, below the standard
67. Top executives at Statoil are currently eligible for
retirement at 62.
The OLF has argued their demands are not in line with
government pension reforms.
In May Norway produced 1.6 million barrels of oil per day,
and 8.9 billion cubic metres of gas in total.