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Norway intervenes to avert oil production shutdown

Gro Braekken, left, head of the Norwegian oil industry association (OLF); Leif Sande, leader of the Industri Energi union; and Norway's Minister of Labour Hanne Bjurstrom


Norway's government ordered on Monday a last-minute settlement in a dispute between striking oil workers and employers in a move to alleviate market fears over a full shutdown of its oil industry and a steep cut in Europe's supplies.

The strike over pensions has kept oil prices on the boil as a lack of government action to avert a plan by the oil industry to lock out all offshore staff from their workplaces from midnight (2200 GMT) has taken markets by surprise.

Under Norwegian law, the government can force the striking workers back to duty and has done so in the past to protect the industry on which much of the country's economy depends.

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But it has been slow to intervene in the dispute, now in its third week, and did so on Monday only minutes before the start of the lockout, citing potential economic consequences.

"I had to make this decision to protect Norway's vital interests. It wasn't an easy choice, but I had to do it," Labour Minister Hanne Bjurstroem said after meeting with the trade unions and the Norwegian oil industry association (OLF).

Leif Sande, leader of the largest labour union Industri Energi, representing more than half of 7,000 offshore workers, said workers would return to work immediately.

"It's very sad. The strike is over," he told journalists.

The dispute has raised eyebrows in Norway, where oil and gas workers are already the world's best paid, raking in an average $180,000 (U.S.) a year. Offshore workers clock 16 weeks a year but cite tough conditions for their call for early retirement at 62.

The oil industry had refused to budge.

Norway is keen to retain its image as a reliable supplier of energy, but analysts have said the Labour-led coalition government was slow to intervene as it faces general elections in a year, and labour unions are important partners.

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On Monday, Labour Minister Bjurstroem said she believed the lockout was not necessary and the oil industry will have to take responsibility.

About 10 per cent of the 7,000 offshore workers have been on strike since June 24.

Brent crude oil shot to over $101 a barrel on Monday on output fears. News about Norway's government intervention came after oil markets closed.

The strike had already choked off some 13 per cent of Norway's oil production and 4 per cent of its gas output.

A full shutdown of output in Norway - the world's No. 8 oil exporter - would have cut off more than two million barrels of oil, natural gas liquids (NGL) and condensate per day.

The last lockout in the offshore sector occurred in 1986, shutting down production on the Norwegian continental shelf completely, and lasted for three weeks before the government intervened. In 2004, the centre-conservative government stepped in to avert a lockout.

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