Bp Share News (BP.)

Tue, 10th Jul 2012 17:16

By Vegard Botterli and Mia Shanley

OSLO, July 10 (Reuters) - Norway restarted some major oil and gas fields on Tuesday after the government ordered an end to a 16-day strike by offshore workers, still unhappy about pensions and retirement issues but unable to repeat the action for at least two more years.

About 10 percent of Norway's 7,000 offshore staff - among the best paid in the global oil industry - had been on strike to demand retirement with full pensions at 62, causing a 13 percent loss of the country's oil output and 4 percent of gas production.

'We are not going to give up, but now we have to wait another two years before we can take new actions legally,' said Leif Sande, leader of Industri Energi, the biggest of the three unions which went on strike on June 24.

The strike pushed oil prices above $100 per barrel on fears of a full loss of supply from the world's eighth largest oil exporter. Norway is also the world's second-biggest gas exporter by pipeline.

The employers threatened a complete shutdown of the entire Norwegian continental shelf, putting pressure on the government to intervene and force a settlement in the strategic industry.

The importance of oil to the Norwegian economy has grown in recent decades, with energy exports making up half of its total exports and the sector accounting for one-fifth of its gross domestic product.

'A lockout would clearly have a severe effect on Norway's reputation as a reliable and stable long-term supplier of oil and gas to the European market and the Norwegian continental shelf as an attractive place for companies to invest,' Nordea markets analyst Thina Margrethe Saltvedt wrote in a note.



TAKING RESPONSIBILITY

The Norwegian government intervened just minutes before the Monday lockout deadline, ordering staff back to work and helping ease supply fears, with Brent crude trading $1.29 down on Tuesday at $98.77 per barrel at 1430 GMT.

'When the Norwegian government stopped the strike, it took control over negotiations,' said Frank Aarebrot, Professor of European politics at Bergen University. He said the National Wages Board would not take over to decide how much the unions will get, forcibly settling the dispute on behalf of the state.

The relationship between the oil industry and the unions is based on a master agreement which sets the ground rules for conduct during talks and strikes, with salary and contract negotiations coming up every two years.

A forced arbitration should take place in a few weeks.

Analysts have said the Labour-led coalition government was slow to intervene as it faces general elections in a year, and labour unions are important partners.

A centre-conservative government averted a lockout in 2004 just hours after one was announced while the ruling government let a tense four days pass before intervening just minutes before the lockout would have taken effect.

Union members were critical of the dispute's outcome.

Lederne union president Tor Haehre said: 'We are a little concerned... that in the next negotiations, oil firms will feel they can run to the government, leaving no real negotiation environment.'

But while most tend to believe the industry was the winner in the dispute, Aarebrot said employers ultimately wound up hurting their relations with both the unions and the government.

After meeting both parties on Monday, Norway's labour minister, Hanne Bjurstroem, told journalists that employers had acted irresponsibly.

'When no-one was ready to assume responsibly, I had to,' she said.

A full closure of output in Norway would have cut off more than 2 million barrels of oil per day.

Gas operator Gassco said on Tuesday it expected its Oseberg field, a key area of production which has been shut since the start of the strike, to restart operations on Friday.

Oseberg is part of the North Sea dated Brent benchmark used as the basis for many of the world's trades.

Statoil, the biggest player on the Norwegian continental shelf, said it would resume production immediately.

'When the conflict now is over we are in the process of starting up production on the fields affected by the strike,' Statoil spokesman Baard Glad Pedersen said. 'We expect an initial startup period of one to two days, reaching full production within the end of the week.'



(Additional reporting by Victoria Klesty; editing by Dmitry Zhdannikov and Keiron Henderson) Keywords: NORWAY STRIKE/

(victoria.klesty@thomsonreuters.com)(+47 2293 6979)(Reuters Messaging: victoria.klesty.thomsonreuters.com@reuters.net)

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