Norwegian Oil Industry Faces Mediation to Avoid Output Halt

Norwegian oil workers and employers will start mediation talks tomorrow to bridge differences and avoid a strike that threatens to halt about 115,000 barrels of oil a day from fields operated by Exxon Mobil Corp. (XOM), GDF Suez (GSZ) and Statoil ASA. (STL)

The mediation deadline is set for midnight tomorrow and involves two unions that broke off wage talks last month over pensions, according to the parties involved. Talks frequently run beyond the deadline.

“We naturally hope for a solution,” Sverre Simen Hov, a spokesman for the Norwegian Organization of Managers and Executives, said by phone on June 13. It’s “very difficult” to predict the outcome, he said.

The negotiations are the first to reach mediation of four broken-down talks for different professions in Norway’s oil and gas industry, including workers in oil services and at supply bases. The risk of a strike comes two years after a 16-day conflict over pensions forced the government to step in to restore production. Norway is western Europe’s biggest oil and gas producer and gets about 22 percent of its economic output from the industry.

A strike by the Safe union would shut production at Exxon’s Balder, Ringhorne and Jotun fields in the North Sea, which produced about 64,000 barrels of oil a day in March, according to the Norwegian Petroleum Directorate.

Legal Challenge

A court is today examining whether Safe’s notice of collective work stoppage is legal following a challenge by the Norwegian Oil and Gas Association. The court’s decision is expected by June 26, the oil lobby’s spokeswoman Eli Ane Nedreskaar said by phone today.

Safe declined to say whether a possible strike at Exxon’s facilities would start even as the court’s decision was pending, the union’s deputy leader Roy Aleksandersen said. A ruling could in theory come as soon as tonight, he said.

A conflict involving the managers’ union would halt output at GDF’s Gjoea field in the North Sea, which produced 28,000 barrels of oil and 11 million cubic meters of gas a day in March. A strike would also affect production at Statoil’s Vega that goes through Gjoea, or about 22,000 barrels of oil a day.

The two unions represent less than half of the 6,715 workers covered by the talks. The biggest union, Industry Energy, was able to reach a wage deal with employers.

To contact the reporter on this story: Mikael Holter in Oslo at mholter2@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Jonas Bergman, Alastair Reed

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