Norway offshore pay talks threaten production

Around a quarter of Norway's oil and gas production could be shut in if pay talks next week go unresolved.

The Norwegian Oil and Gas Association (Noga) today said that the first of four sets of pay negotiations for around 7,000 offshore workers have broken down and will move to mediation on 28-29 September. The talks affect staff employed by state-controlled Equinor, ConocoPhillips Norge, Aker BP, Neptune Energy, Lundin, Repsol and Wintershall among others.

If next week's talks collapse around 900,000 b/d of oil equivalent (boe/d) could be shut in, Noga said. Data from the Norwegian Petroleum Directorate (NPD) show that the country produced nearly 4mn boe/d in August, split roughly evenly between liquids and gas.

Norwegian trade unions Lederne and Industri Energi, which represent workers in the pay disputes, were not able to comment.

Shutdown threats are a regular feature of Norway's annual North Sea pay negotiations, and it is rare for industrial action to significantly affect production. Any shut-ins could affect output from eight producing assets including Kristin, Tyrihans and Maria, Aasta Hansteen, Kvitebjorn, Valemon and Snorre B and Norway's largest field, Johan Sverdrup.

The latter began producing in October last year, and output averaged 400,000 b/d of crude in the first seven months of this year according to NPD data. Loading programmes show exports of Johan Sverdrup will rise by 61pc on the month to 452,000 b/d in October, as government-mandated caps to production eased.

Riyan Zerrouki and Ruxandra Iordache