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Working law change 'could cost industry billions'

Parliamentary proposal to improve terms and conditions of more offshore workers may hit future developments, officials warn

Norwegian oil industry officials this week warned that a parliamentary proposal to include more offshore workers in the country’s Working Environment Act (WEA) could cost the industry vast sums and result in fewer field development projects in the future.

A proposal from a group of parliament members could potentially add Nkr45 billion ($5.3 billion) in costs over 10 years for rebuilding vessels, higher wages and market-related consequences, according to a report from consulting group Menon Economics, commissioned by the Norwegian Oil & Gas Association. 

In addition, the proposed law change could add Nkr21 billion to future decommissioning costs, as it would make lifting operations more expensive, according to the report. 

Future field developments could also be postponed or cancelled because of higher costs, it warned.

The Labour party and two other parties have proposed that workers engaged in petroleum-related activities on board so-called multi-purpose vessels should be included in the WEA, which would give them additional rights in areas including health and safety and working conditions.

The WEA currently applies only to workers on offshore facilities that perform work that is in contact with hydrocarbons, and to specific groups such as divers.

Workers on support vessels that perform operations that are not in direct contact with oil and gas are covered by maritime law, and their contracts are based on the laws in the vessel’s home country.

At an open hearing in parliament’s Labour & Social Affairs Committee this week, labour organisations were clear in their support of the proposal. “Our members are asking the authorities to heed our warning. They need safety officers and the right to call safety authorities to report when something happens,” Ommund Stokka, of the Industri Energi union, said at the hearing.

The trade union for maritime employees wanted to take the change even further. “The principle should be the same for everyone on board, not just the oil workers. We should not have some workers on board that are protected by Norwegian law, while others are not,” said Terje Pettersen of the Norwegian Seafarers’ Union.

Industry representatives said the proposal was not sufficiently researched, and expressed concern about the possible consequences, including the costs outlined in the Menon Economics report.

“We want to warn parliament against making a change that could harm a value chain that is already under great pressure and which would bring costs that could be unnecessary, as these issues could be solved in a better way if we took the time to evaluate the consequences thoroughly,” said Stein Lier-Hansen of the Federation of Norwegian Industries.

Other industry representatives also called for a more thorough evaluation of the consequences before any changes are made to the current regulatory regime.

Norway's Petroleum Safety Authority (PSA) also spoke at the hearing, and called for more clarification in the proposal. “It is unclear which vessels it is aimed at, and which activities would be included,” said PSA director general Anne Myhrvold.

It is currently unclear whether the proposal will get majority support in parliament. Much hinges on the Christian Democrats, which have yet to take a stance on the issue.

The Labour & Social Affairs Committee has until 16 May to decide on a final wording of the proposal, including changes to take industry concerns into account and compromises to win over the votes of the Christian Democrats. Parliament will vote on the proposal on 23 May.