Equinor’s oil & gas output to drop while it shuts in fields as offshore workers go on strike

Norwegian state-owned energy giant Equinor has initiated a shutdown of production at three fields on the Norwegian continental shelf (NCS) and revealed plans to do the same with four more, as a direct result of the strike action that offshore workers have undertaken due to a dispute over wage demands.

Equinor informed on Tuesday that it had initiated a “safe shutdown” of the Gudrun, Oseberg South and Oseberg East fields after members of the Norwegian Organisation of Managers and Executives (Lederne) trade union went on strike from midnight.

To remind, the members of Lederne in a referendum voted against the mediator’s proposal reached during the wage negotiations for offshore personnel between the labour organisations and the employers’ organisation, the Norwegian Oil and Gas Association (Norog).

The Gudrun oil and gas field is located in the central part of the North Sea and production started in 2014. The oil and gas from the field are transported to the Sleipner A platform via two pipelines for further processing and export.

The Oseberg South field came on stream in the winter of 2000, while Oseberg East started production in 1999. The Oseberg Field Centre is used to treat oil and gas from the satellite fields Oseberg East and Oseberg South.

According to Equinor, the total production from the three affected fields is around 89,000 barrels of oil equivalent (boe) per day, of which 27,500 boe per day is natural gas.

Furthermore, as a further extension of the strike has been notified for the Heidrun, Kristin and Aasta Hansteen fields, taking effect from the night before Wednesday 6 July, Equinor says that a “controlled shutdown of production” will be performed at these installations, including the Tyrihans field, which is tied to the Kristin platform, and thus, Tyrihans will need to cease production because Kristin cannot handle its output.

The Norwegian state-owned giant outlined that the total production from these four fields is around 333,000 boe per day, of which 264,000 boe per day is natural gas. In addition, the strike is expected to be stepped up further from 9 July at Sleipner, Gullfaks A and Gullfaks C. Equinor says that the consequences of this escalation are “not yet clear.”

The Norwegian Oil and Gas Association pointed out that about 13 per cent of Norway’s daily gas exports would be lost as a result of the planned extension of the industrial action by Lederne’s members.

“These reductions are a consequence of Lederne calling a strike after it became known on 30 June that the union’s members had rejected the settlement for the offshore collective pay agreements negotiated through mediation earlier in June,” explained the Norwegian Oil and Gas Association.

Furthermore, the Norwegian Union of Industry and Energy Workers (IE) and the Norwegian Union of Energy Workers (Safe), which between them represent about 85 per cent of operator employees on the NCS, both agreed to this year’s pay agreements, including a general rise of NOK 32 200 (about $3,249) plus several other rate increases.

Elisabeth Brattebø Fenne, director of organisation and employer policy and lead negotiator at Norwegian Oil and Gas, remarked: “We’re very surprised that Lederne is choosing to take this step. It’s deeply disappointing.”