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Norway’s government halts oil and gas strike

Norway’s government halts oil and gas strike

 

Norway’s government has intervened to end a strike by oil and gas workers that threatened to slash production at a time when Europe is scrambling for supplies to offset cuts to Russian output.

Labour minister Marte Mjøs Persen summoned oil companies and workers late on Tuesday and announced the industrial action had been brought to an end.

The strike had reduced gas supplies to the UK and much of continental Europe and had led to a surge in gas prices to their highest level in four months. The Norwegian government has the authority to intervene in labour disputes under certain conditions. It had been estimated the strike would have cut Norway’s gas output by almost 60 per cent by the weekend.

“When the conflict can have such great social consequences for the whole of Europe, I have no choice but to intervene in the conflict,” Persen said in a statement. “It is unjustifiable to let gas production stop to such an extent.”

Audun Ingvartsen, leader of the Lederne labour union, told Reuters that workers would be “going back to work as soon as possible”.

Workers had threatened to escalate the shutdowns at oil and gasfields over the course of the week, with gas transmission system operator Gassco warning on Tuesday that Norwegian supplies to the UK could be completely cut off at the weekend.

While relatively low demand for gas during the summer months meant immediate shortages were unlikely as a result of the strike action, there were fears it would further hamper Europe’s efforts to fill gas storage facilities ahead of what is expected to be a tough winter.

Russia, which before the invasion of Ukraine was supplying about 40 per cent of Europe’s gas, has cut back supplies, reducing capacity on the key Nord Stream 1 pipeline to Germany by 60 per cent.

Any loss of Norwegian supplies would have hampered already challenging efforts to fill storage facilities, with Europe facing the prospect of gas shortages and rationing this winter.

Norway’s ministry of foreign affairs said in a statement after the strike had been ended that the country “must do everything in its power to help maintain European energy security and European cohesion against Russia’s war”.

The UK has been sending as much gas as possible through pipelines to Belgium and the Netherlands, including excess supplies from Norway and deliveries to the UK in the form of seaborne shipments of liquefied natural gas.

Norwegian oil and gas workers were striking over concerns about below-inflation pay increases at a time when oil and gas companies are earning record profits from soaring prices.

The dispute will now move to what the Norwegian government called a “compulsory wage board”.

The UK government has said it is comfortable the country will have enough gas supplies but has faced pressure from industry concerned over potential shortages this winter if Russia completely severs flows to Europe.

The UK’s Energy Intensive Users Group of manufacturers, such as the steel and chemicals industries, is due to meet business secretary Kwasi Kwarteng on Wednesday and has indicated it is looking for greater clarity on whether industry could face gas rationing this winter.

The business department has highlighted the UK’s “diverse” range of supply options, including imports from Norway and its holding Europe’s second-largest LNG import capacity, as well as domestic North Sea production.

Norway became the UK’s largest supplier last year, outstripping domestic production for the first time.

Countries in mainland Europe have already urged households and industry to reduce their usage in case Russia cuts off gas exports to the continent, but the UK government has so far played down concerns.

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Published: 06-07-2022

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