Offshore Workers Strike, Norwegian Rigs Begin to Shut Down

(Dow Jones) OSLO–At least five of Norway’s oil and gas rigs will be shut due to a strike launched at midnight Saturday by 114 workers at oilfield service company Baker Hughes Inc. (BHI), but the effect on production is limited.

The strike could delay scheduled drilling of production and exploration wells for a range of giant oil companies such as Statoil ASA (STO), Marathon Oil Corp. (MRO), Exxon Mobil Corp. (XOM), Royal Dutch Shell PLC (RDSA), Suncor Energy Inc. (SU), Centrica PLC (CNA.LN), and Eni SpA (E).

This limited action comes ahead of a potential larger strike in Norway’s dominant export oil sector: the National Mediator has set a June 23 deadline for this year’s wage settlement between unions and the oil industry after negotiations failed over Statoil‘s ending of an early pensions deal. Any resultant strike could shut down most of Norway’s daily production of 3.8 million barrels of oil equivalent.

Rigs affected by the Baker Hughes strike are Songa Trym, Stena Don, Songa Dee, Oseberg C, Oseberg Ost, Brage, Gullfaks C, Transocean Winner, West Alpha, Songa Delta, West Navigator, Ringhorn and Scarabeo 8, according to the Oil Industry Association. Eight of these are employed by Statoil, but spokesman Ole Anders Skauby told Dow Jones Newswires “there will be no immediate consequences for production.” Most of the rigs are drilling new production wells or doing maintenance work on existing wells.

Controlled shutdowns of operations are estimated to be completed at Oseberg Ost on June 25, Songa Trym on June 18, Transocean Winner on June 16, West Alpha on June 14 and Songa Delta on July 5, the Norwegian Oil Industry Association said in a statement.

Oseberg C faced a “possible well control issue” due to the strike, but it wasn’t clear whether this would affect production. Shell’s operations with West Navigator will be “hindered” after June 18, according to the Oil Industry Association.

Workers won’t begin their strike until the operations are shut down in a safe manner, according to a deal struck between the parties Friday.

Members of the union Safe are striking because Baker Hughes changed their conditions after acquiring BJ Services in February. The union accused Baker Hughes of financing the acquisition by reducing workers’ benefits.

“I can’t imagine a more just strike than this one,” said Safe leader Hilde-Marie Rysst, in a statement Sunday. “We are appalled by the arrogance and complete lack of respect of the basic principles of Norwegian labor whichBaker Hughes has demonstrated to our members.”

The Norwegian Oil Industry Association said Baker Hughes offered the same agreement to the Safe members as it offered to its 550 other employees, but that the union insisted on keeping a previous, better agreement.

“It is totally unreasonable for Safe to demand a more lucrative deal than their colleagues in the company, or the rest of the business,” said Havard Hauan, lawyer in the Oil Industry Association, in a statement Sunday.

– By Kjetil Malkenes Hovland, Dow Jones Newswires