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Norway Oil Workers Begin Strike, Cutting Output

Norwegian oil workers are going on strike from today, cutting output from the world's third- largest oil exporter, after two unions failed to reach a pension accord with employers.

About 200 workers at North Sea fields operated by Statoil ASA, ConocoPhillips and Exxon Mobil Corp. are ceasing work, said Bjoern Tjessem, deputy leader of the OFS labor union. The action may affect fields with combined output of as much as 455,000 barrels a day. Closure of all the fields would cost producers 115 million kroner ($16.6 million) daily, the Norwegian Oil Industry Association said.

``It will take about one to two days to shut down production at the fields,'' Tjessem, who represents about 2,200 oil workers, said in a telephone interview. Bi-annual talks between employers and the OFS and Lederne unions broke down on discord over pension plans and the use of temporary workers, he said.

Lower output from Norway, which pumps about 3 million barrels of oil a day, may boost oil prices that have risen 18 percent this year as violence in Iraq curbs global supplies, said analysts including Tor Kartevold at Statoil, Norway's largest oil company.

Crude Oil Rises

Crude oil for July delivery traded up 10 cents at $38.56 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 3:15 a.m. central European time. Prices surged 3.1 percent yesterday after at least 41 people were killed when car bombs exploded near an army recruitment center in Baghdad and outside a government office in Yethrib.

``A strike now may have a larger effect than normal on prices, driving them up, but by less than $1 a barrel,'' said Kartevold in a telephone interview before the strike. Still, ``it usually doesn't take too long to solve such disputes in Norway.''

A strike in June 2000 closed down output of some 285,000 barrels of Norwegian oil a day. The government stopped it after less than two weeks, when oil companies threatened a lockout of 2,600 workers.

This week's talks, which began Wednesday, were held with a state-appointed mediator in Oslo after earlier negotiations between the unions and employers broke down on May 27.

A strike became more difficult to avoid after the employers last month reached agreement on the same issues with a third oil-workers' union, Nopef.

``It's necessary to have similar agreements with all parties, because the unions organize the same kind of workers,'' said the Norwegian Oil Industry Association, or OLF, in a statement on its Web site. ``OFS and Lederne demanded much more'' than Nopef, it said.

Affected Fields

The affected fields are Statoil's Snorre and nearby Vigdis, Exxon's Ringhorne and the Kilo and Bravo platforms at ConocoPhillips' Ekofisk.

Statoil owns 14 percent of Snorre, which pumps about 238,000 barrels of oil daily. The field is also estimated to produce 0.076 billion standard cubic meters of natural gas and 0.13 million tons of natural-gas liquids this year, according to Statoil's Web site.

Other Snorre owners include Norsk Hydro ASA with 17.7 percent, Exxon with 11.2 percent and Total SA of France with 6 percent.

The Vigdis field has output of about 75,000 barrels a day.

Ringhorne, which is located near the Balder field and is operated by Exxon, has no natural-gas production, according to data from the Norwegian oil ministry. Combined, Ringhorne and Balder produced an estimated 68,000 barrels of oil a day last year. Exxon is the world's largest investor-owned oil company.

``The strike affects many people who are not directly involved in the conflict, but who have to be demobilized because the activities on installations are reduced or stopped,'' said OLF.

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