1500 laid off due to the offshore strike

Jakob Korsgaard strike oil & gas maersk offshore strikeChief negotiator for the Rig Owners, Jakob Korsgaard. Photo: Sysla / Fredik Refvem

About 1500 will be laid off as a result of the offshore strike

Negotiation leader for the rig companies, Jakob Korsgaard, fears that the offshore strike will be prolonged.


Last week, 669 offshore workers went out on strike on the Norwegian shelf when trade union Safe and the Norwegian Association of Ship Owners broke the negotiations in the rig settlement. The night before Monday, the conflict was stepped up. Thus, a total of 1550 workers on 29 installations are on strike.

As a result, a large number of people are laid off. The reason is that the affected installations must shut down as a result of the conflict. Thus, there is no work for other employees either, as they are either organized in other unions or not at all.

– The layoffs are already underway. The number of people laid off could become about the same as the number of strikers, says Jakob Korsgaard, Managing Director of the rig company Maersk Drilling Norway and negotiator on behalf of the Association of Norwegian Ship Owners.

This means that about 1,500 offshore workers can be laid off in total.

Big losses

Korsgaard believes the economic consequences of the strike can be extensive. He points to that a rig can cost more than NOK five billion to build.

– It goes without saying that the consequences will be great when they are lying paralyzed, says Korsgaard.

The day rate for renting a rig is between NOK two and three million. Approximately equivalent amounts are spent on indirect costs for suppliers and customers.

– Large losses are incurred from day one. I speak with my colleagues in other rig companies daily and there is a lot of concern about the situation, he says.

Denies gambling

Korsgaard has on several occasions claimed that Safe is acting irresponsibly by mounting a strike. He points to that the rig industry is severely hit by the oil crisis, that many rigs are in dock and thousands of jobs have been lost.

– This conflict is very harmful to the industry, and for the work done to improve competitiveness and get back on track. Safe is gambling with the companies’ finances at stake, he says.

– I will strongly refute that. The companies are making money now, but do not wish to share with us, says Deputy Leader in Safe, Roy Aleksandersen.

– Is everybody making money?

– No, not everyone – some have more strained finances than others. When rental prices were soaring before the crisis, we did not get a fair share of the profits. During the downturn, we have shown moderation, and now it is time for us to get something back, says Aleksandersen.

Jakob Korsgaard answers the following:

– The economy in the industry is still very serious as a result of the crisis. The companies renegotiate debt terms, employees are terminated, and cost control is on everyone’s agenda. It goes without saying that the companies are under enormous pressure, he says.

Fears prolonged conflict

While Safe said no to this year’s settlement, the two other trade unions involved, Industri & Energi and DSO said yes.

– We have a clear understanding that the majority of employees are pleased with what was negotiated this spring, says the Managing Director.

Korsgaard acknowledges that the situation is currently at a stalemate. There has been no dialogue between the parties since the mediation was broken.

– Do you fear that the offshore strike will be prolonged?

– Yes, I am afraid it is.

Facts about the offshore strike

  • Who is on strike?

It is the trade union Safe that has taken out 669 members in a strike and announces that another 901 may be taken out the night before Monday. The strikers mainly work on floating rigs, but a few also work with drilling and service on fixed installations. The other trade unions, Industri & Energi and DSO, have already signed a similar settlement.

  • Who is the counterparty?

The Norwegian Association of Ship Owners is an industry organization for the rig companies and the counterparty in the conflict. Jakob Korsgaard leads the negotiations on behalf of the rig owners. He is the Managing Director of Maersk Drilling Norway.

  • What is the conflict about?

Here they don’t completely agree. Safe believes it’s a combination of pay and pension.

They believe the rig owners will weaken a retirement scheme that the rig workers have today, claiming that wage development has been less than for other oil workers.

The rig owners believe on the other hand, that the mediation was broken because of unreasonable wage demands.

  • Is there hope of a quick solution?

Right now the parties are deeply entrenched and the word exchange is relatively crass. Safe says the rig owners must use their grey matter and is prepared for a long-lasting conflict.

Negotiation leader Korsgaard from the Shipowners’ Association counters that he hopes Safe will come to their senses. He believes the union acts irresponsibly, pointing to that the industry has been through a serious crisis.

At the same time, one must remember that such a conflict is also a play between the parties. Both parties are In all likelihood interested in a resolution of the conflict as soon as possible.

  • How many installations are affected?

Twenty-nine installations are affected so far. These will probably be shut down as a result of the strike.

  • What are the consequences for production on the Norwegian Continental Shelf (NCS)?

So far, they are limited. The Knarr field is the only producing field affected by the strike so far.

Operator Shell closed the field on Tuesday morning. But as the strike is stepped up this weekend, more fields in production are affected.

  • What is the role of Equinor, being the shelf’s biggest player?

The company is not a party to the conflict and has no staff on strike, but four of the affected installations are at work for the company – three rigs and the vessel Island Wellserver.

According to press contact in Equinor, Eskil Eriksen, the conflict does not hinder progress on the drilling projects affected by the strike.

  • When was the last strike on the NCS?

The last major strike was in the autumn of 2016. It was the staff in the oil service companies that went on strike on that occasion.

The strike lasted for three weeks and placed 17 installations on the NCS offside. Industry Energy took out about 300 members in Schlumberger, Baker Hughes, Halliburton and Oceaneering on strike.

As a direct and indirect consequence of the strike, almost 600 employees in the Norwegian oil & gas companies were laid off. The Association of Ship Owners notified of about 1700 lay-offs.


© NTB scanpix / #Norway Today