Norway oil and gas output cut due to strike — Analysis
A protest of offshore workers may cost as much as 13% of the country’s total natural gas production by Wednesday
Norway, Europe’s largest supplier of hydrocarbons is cutting its natural gas production due to strike by senior off-shore workers. This action came into effect Tuesday.
According to Reuters, the Norwegian Organization of Managers and Executives union (Lederne), is requesting a rise in wages in order to offset rising inflation. Production at three offshore oil fields was stopped on the first day. Two more stages of the protest are planned for Wednesday or Saturday.
The Norwegian Oil and Gas Association’s (NOG) figures show that natural gas production will decrease by 13% and crude oil by 6.5% once the second stage comes into effect on Wednesday. They correspond to 130,000 barrels daily of oil, 292,000 barrels equivalent of gasoline and 292,000 barrels per day.
Reuters reports that if the protests escalate, daily production could be reduced by 230,000 barrels per day of equivalent oil gas and 160,000 barrels each of equivalent oil liquid hydrocarbons.
Norwegian operator Equinor confirmed production was stopped at Oseberg South, Gudrun and Oseberg East. Equinor is now preparing to close the Heidrun and Kristin fields. It also stated that the Tyrihans field which is linked to Kristin platforms will need to be stopped.
Following the rejection of a wage agreement by Lederne on Thursday, the Lederne union launched a strike. “Our goal is that employers engage with us and listen to their employees,”Audun Ingvartsen, a union leader, spoke to the news agency. Others unions in Norway accepted the agreement and won’t strike.
Norway is taking action in response to rising fuel prices worldwide and an increase in European demand. The country wants to separate its economy from Russian oil. According to the country’s petroleum ministry, it currently meets about 25% of EU demand and 1/5th in UK demand.
The Dutch TTF trading platform saw a spike of 10% in natural gas benchmark futures on Monday due to the strike threat from Norway.
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