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Norway Oil Producers Say Rig Strike Can Be Averted (Update1)

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Norway Oil Producers Say Rig Strike Can Be Averted (Update1) 

By Marianne Stigset and Alexander Kwiatkowski

June 3 (Bloomberg) — Norway oil producers are “optimistic” a strike called by rig managers this weekend that threatens to cut 9 percent of the country’s output can be averted as government-mediated talks start on June 5.

“We’ve presented them with a good offer and it should be possible to come to an agreement,” Jan Hodneland, head negotiator for the Norwegian Oil Industry Association, said today by phone from Stavanger. “I’m reservedly optimistic.”

The Norwegian Organization of Managers and Executives said it will pull 86 workers from StatoilHydro ASA’s Snorre A platform and Royal Dutch Shell Plc’s Draugen A rig on June 7 if a new agreement isn’t reached on wages and working hours. The strike imperils output of 220,000 barrels of oil a day, or about 9 percent of Norway’s total oil production.

The mediator-led talks will start June 5 at 10 a.m. local time and are scheduled to run until midnight on June 6. Talks between the union and the industry group, which represents Statoil, Shell and ConocoPhillips, broke down on May 20. The union has also threatened to broaden the strike to other North Sea platforms after June 7.

“Our attitude going into this is that we’ll work on reaching an agreement,”Jan Olav Brekke, head of the union, said in an interview today. “Should we be presented with an offer prior to mediations starting we’d consider it.”

The union is pulling 60 members at Snorre A and 26 at Draugen A should talks fail.

Production Cuts?

StatoilHydro ASA said a potential strike would shut down about 150,000 barrels a day of production from its Snorre A and Vigdis platforms, according to spokesman Torstein Stangenes.

“Should the strike take place, we would have a total production stop after a couple of days,” he said today on the phone from Bergen. A production stop at Snorre A would also mean a “limited production cut” from Snorre B, he said.

Shell, Europe’s biggest oil producer, may be forced to cut output from Draugen A, which pumps 70,000 barrels a day, if the strike goes ahead, the company said today.

The strike “may possibly have an effect on production,” Kitty Eide, a Shell spokeswoman, said in a telephone interview today. “We’re awaiting the discussions.”

Norway’s oil production, including natural gas liquids and condensate, is estimated at 2.4 million barrels a day in 2008, according to the Petroleum and Energy ministry. The country is the world’s fifth-biggest supplier of crude.

Separately, talks between unions for offshore workers and employers broke down May 30, with mediation scheduled to start June 17, the union SAFE said on its Web site. The workers are threatening a strike on four rigs owned by Transocean Inc., Odfjell Drilling AS, Seadrill Ltd. and Stena Drilling Ltd.

To contact the reporters on this story: Marianne Stigset in Oslo at[email protected]Alexander Kwiatkowski in London at[email protected]

Last Updated: June 3, 2008 08:45 EDT

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