State-controlled Statoil, which dominates the sector, is preparing a controlled shutdown of all its production on the Norwegian continental shelf (NCS), an operation which will take 1 to 4 days.
On Thursday (July 5) the employers sent out a lockout notice in order to end a strike by 700 oil workers in the North Sea that has been going on for two weeks.
The lockout will start today (10 July). This would mean that 6,515 oil workers would be locked out from their jobs offshore and all production on the Norwegian Shelf will be shutdown.
The Norwegian dispute centres on a demand for early retirement at 62 by offshore workers which has raised eyebrows in a country that already pays the world's highest oil and gas salaries. Offshore workers put in 16 weeks of work a year.
Information manager Bård Glad Pedersen said Statoil will lose 520 million Norwegian crowns (€69.3 million) per day. Norway, the world's fifth largest oil exporter, will lose 1.8 billion crowns per day, according to the Norwegian TV station NRK.
“Statoil will produce as normally up until midnight. Then we will start the procedures of closing each area. It will take between one and four days before everything is closed,” Pedersen told the Norwegian newspaper Aftenposten.
Labour Minister Hanne Bjurstrøm had asked the two sides in the conflict to resume negotiations with the aim to find a quick solution to the conflict, without getting a result.
Oil analyst at Nordea bank Thina Margrethe Saltvedt said that the last weeks’ strike had already resulted in an increased oil price.
“When the oil price goes up, then we will see the same happen to gas and diesel. If the lock-out happens, then it won’t take long before the higher prices will affect us,” Saltvedt told NRK.
The Norwegian strike and potential lockout comes at an inconvenient time for the global oil market with the loss of Iranian oil and a large disruption of Libyan oil exports.
Saltvedt added that Norway has a reputation of being a politically stable country and a safe supplier, but the Scandinavian country’s reputation could be damaged.
“We are not supporting such a reputation with a situation like this. Our reputation will be bruised. I think we can soon forget to be seen as important internationally,” she said.