Norway's Oil Industry Threatens Lock-Out in Labor Strike Shut Down to Begin at Midnight
Norway's Norwegian Oil Industry Association, the petroleum industry's representative in that country has announced that they will begin a complete lockout tonight at midnight.
This action is in response to an Offshore Oil worker's strike that began on June 24th. That strike has already forced the closure of some Norwegian fields.
The lockout will stop work for about 6,500 workers. The Unions are asking for an earlier retirement age, currently the retirement age is 65, the unions are pushing for 62. There is also a dispute concerning pension funding.
It will also freeze oil and gas production in the country, putting a stop to the approximately 2 million barrels of oil produced there each day. That number represents about two percent of the oil pumped world-wide.
That action will conceivably drive up the price of a barrel of oil on the world market by between three and four dollars.
More importantly, the freeze of natural gas production will be very detrimental to Europe. Norway produces close to 20 percent of the region's natural gas, second only to Russia. Britain, Germany and France are some of the big consumers of Norway's natural gas.
Bernstein Research in London says that European gas inventories are already running about eight percent lower than last year's supplies and a shut down of Norway's production has considerable potential to compound an already tightening European gas market.
President of Industri Energi, Leif Sande, one of the labor unions involved in the strike thinks that a shut-down of the industry is crazy and says the oil companies are set to lose a lot of money if the threatened lock-out takes place. Sande has doubts that a settlement will be found before the deadline tonight.
News of the threatened lock-out caused a slight uptick in world oil prices today.
Paris based International Energy Agency said it was "monitoring summer oil supplies very closely." They have not said however, if they are considering a release of reserves if the full lock-out occurs.
The largest producer in Norway, Statoil stands to lose $85 million a day if a lock-out takes place.