By OGJ editors
HOUSTON, June 24 -- The Norwegian government was reported to be preparing Thursday to stop plans by the Norwegian Oil Industry Association (OLF) to lockout offshore workers Monday in a widening strike over pensions and job security.
The Federation of Norwegian Oil workers (OFS) escalated the strike Wednesday, threatening to shut in 720,000 b/d of oil production and 30 million cu m of natural gas production. The OLF retaliated Thursday with plans for a lockout at all offshore facilities on the Norwegian continental shelf, effective late Monday. OLF officials said the lockout was in response to strikes by two offshore unions.
A lockout would result in an almost complete shutdown of production from the Norwegian continental shelf, which currently totals 3.3 million b/d of oil and 7.3 bcfd of natural gas. So far, the strike has shut in production of 400,000 b/d.
According to Dow Jones Newswires, an unnamed senior government official said the government would intervene in case of a lockout. In a similar strike in 2000, the Norwegian government stepped in to compel arbitration, forcing strikers back to work after OLF announced it was planning a lockout.
The oil industry is the biggest revenue producer for Norwegian government. Coming in the current period of high prices, any prolonged shutdown would have a significant impact on revenues for both the government and oil companies. Analysts at Wood Mackenzie Ltd., Edinburgh, calculated that the net loss from a complete shutdown would be more than $130 million/day.
"Due to the high (78%) tax rate and the fact that nearly all of the companies with significant production are in a tax-paying position, the majority of the impact will fall on the government exchequer. In addition, the Norwegian government has substantial direct equity stakes in the Norwegian fields," said Wood Mackenzie analysts. They calculated the loss to the Norwegian government at $110 million/day.
The companies primarily affected by a lock out would be Statoil SA and Norsk Hydro AS, with potential net losses of $6.4 million/day and $3.5 million/day, respectively. Among foreign-based oil companies, ExxonMobil would be most affected at a potential loss of $3 million/day.
With so much at stake, the government is expected to take action to prevent a total shutdown, analysts said.
