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When Will Oil Bounce Back?

When Will Oil Bounce Back?

After weeks of extremely volatile…

Norwegian Oil Companies to Shutdown All Oil Production at Midnight

Norwegian Oil Companies to Shutdown All Oil Production at Midnight

The strike between offshore Norwegian oil workers and the oil companies is now into its third week with little progress made in the talks over pensions. The oil companies have been hoping that the Norwegian government will step in to force a resolution to the problem, however the Labour-led coalition government has been reluctant to intervene due to the upcoming elections at the end of this year, in which the trade unions are wield a lot of power.

In order to try and force the governments hand a little Eli Ane Nedreskaar, a spokeswoman for the Norwegian oil industry association (OLF), told Reuters that “the companies are now ready to close down production on the Norwegian continental shelf if the government doesn't intervene before midnight.”

Statoil, the state-owned oil major, and the largest operator in the sector, has announced that it plans to shutdown all of its production facilities in a move that will take as long as four days to complete.

It would be the first time in over 25 years that the Norwegian oil industry has been completely shut down, and as the world’s 8th largest exporting country, and Europe’s largest, it could severely affect world oil supply. In fact Brent has climbed to $99 a barrel as markets are unsure whether or not the government will step in to prevent the shutdown.

In a show of defiance against the OLF, Leif Sande, the leader of IndustriEnergi, the biggest of the three labour unions involved in the dispute, has said that their “members are preparing for the lockout and will travel back to land at midnight.”

Anne Gjoen, an analyst at Handelsbanken, claimed that she does “not think that we are going to see a lockout. At the same time, I am a bit surprised that the conflict has lasted this long.”

By. James Burgess of Oilprice.com



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