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Fifth of Norwegian oil, gas production could be shut down in pay dispute

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London — More than a fifth of Norwegian oil and gas production, including the flagship Johan Sverdrup field, risks being shut down as soon as Sept. 30 if talks aimed at settling a dispute over collective pay agreements are unsuccessful, industry group Norwegian Oil & Gas said Sept. 28.

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In a statement, Norwegian Oil & Gas said talks in early September had failed to reach a settlement and that the dispute had entered a mediation process, stipulated under Norwegian law, with three unions that account for 7,000 employees in sectors ranging from management to support services such as catering. Norwegian Oil & Gas noted the squeeze on industry finances as a result of this year's coronavirus-induced collapse in commodity prices.

"If the effort to mediate fails, several fields -- Johan Sverdrup, Kristin including Tyrihans and Maria, Aasta Hansteen and Kvitebjorn including Valemon -- as well as the Snorre B platform risk having to shut down," Norwegian Oil & Gas said. "That would reduce production from the Norwegian continental shelf by some 900,000 b/d of oil equivalent, or about 22% of total daily output of oil, gas, condensate and natural gas liquids."

It noted some other facilities such as parts of the Ekofisk complex could be affected by walk-outs, for example by catering staff, but without production being affected.

"The oil and gas industry finds itself in a very demanding financial position because of the global epidemic," the chief negotiator for Norwegian Oil & Gas, Jan Hodneland, said. "That has resulted in substantially weaker oil and gas prices compared with last year, and it is very uncertain how long this demanding period will last. The most important job we must do in the time to come is therefore to protect the competitiveness of the industry and as many jobs as possible."

Operating companies affected by the threat of strike action include state-controlled Equinor, US upstream company ConocoPhillips, joint venture Aker BP, London-based Neptune Energy, Sweden's Lundin Energy, Spain's Repsol, Germany's Wintershall Dea, Eni subsidiary Var Energi and Oslo-listed independent Okea, the statement said.