Norway’s government on Tuesday intervened to end a strike in the nation’s energy sector that had reduced oil and gas output, a union leader and the Labour Ministry said.

Norwegian offshore oil and gas workers went on strike over pay on Tuesday, the first day of planned industrial action that had threatened to cut the country's gas exports by almost 60% and worsen supply shortages linked to the war in Ukraine.

"Workers are going back to work as soon as possible. We are cancelling the planned escalation," Lederne union leader Audun Ingvartsen told Reuters. Asked whether the strike was over, he said: "Yes".

The Labour Ministry separately confirmed it had exercised its right to intervene.

“When the conflict can have such dire consequences for the whole of Europe, I have no choice but to intervene in the conflict,” Labour Minister Marte Mjoes Persen said.

The Norwegian government is proposing compulsory wage arbitration to resolve the industrial dispute between the trade union Norwegian Organisation of Managers & Executives (Lederne) and the Norwegian Oil and Gas Association (Norog) employers’ group in connection with this year’s basic national settlement.

As encouraged by Persen, the parties have agreed to end the strike so that everyone can return to their post as soon as possible, the Labour Ministry said.

The strike could have cut gas exports by 1.117 million barrels of oil equivalent per day, or 56% of daily gas exports, while 341,000 barrels of oil would have been lost, Norog said.

Oil and gas from Norway, Europe's second-largest energy supplier after Russia, is in high demand as the country is seen as a reliable and predictable supplier, especially with Russia's Nord Stream 1 gas pipeline due to shut for maintenance from 11 July for 10 days.

Offshore workers from one of the Norwegian oil industry's three main trade unions had carried out threatened strike action earlier Tuesday, affecting production on three offshore fields.

Workers demanded wage hikes to compensate for rising inflation, and the strike added to the stresses being felt across Europe, where supplies of natural gas have been reduced by Russian export cutbacks and fuel prices have soared in recent weeks.

Oil futures prices fell by around 10% and 11% on Tuesday, however, despite the temporary supply disruption caused by the Norway strike, as investors worried about the effects of a potential global economic recession.

The strike was launched just a day after Norwegian regulators gave approvals to allow additional production from several fields.

Norway’s biggest operator, Equinor, initiated on Tuesday the shutdown of three fields in the North Sea — Gudrun, Oseberg South and Oseberg East — as a result of the strike.

However, by Wednesday morning the company said it had begun the process of restarting these fields, with all expected to be back in full operation within a couple of days.

Had it progressed, the industrial action could have expanded to include three other fields — Kristin, Heidrun and Aasta Hansteen — from midnight on Wednesday.

A seventh field, Tyrihans, also would have been shut on Wednesday because its output is processed from Kristin.

Escalation avoided

Oil output would have been cut by 130,000 bpd by Wednesday, Equinor said.

The strike could have quickly reduced the country’s gas output by as much as 292,000 boepd, or 13%, according to an industry representative from Norog.

A further planned escalation by Saturday could have reduced output further on Sleipner, Gullfaks A and Gullfaks C.

Last Thursday, Lederne trade union members rejected a proposed wage deal that had been negotiated by companies and union leaders.

Ingvartsen told Upstream earlier on Tuesday it was up to Norog to avoid those consequences, but declined to comment on whether the union would welcome government intervention.

Norway’s other two main oil and gas labour unions had accepted the deal and did not strike.

A spokesperson from Norog told Upstream earlier on Tuesday that Lederne's demands could not be met.

“The Norwegian Union of Industry & Energy Workers (IE) and the Norwegian Union of Energy Workers (Safe), which between them represent about 85% of operator employees (on the Norwegian continental shelf), both signed up to this year’s pay agreements. These include a general rise of Nkr32,200 ($3226) plus several other rate increases,” he said.

Some union sources consulted by Upstream had suggested that Norog was wary of giving in to Lederne's demands as this could turn the spotlight back onto the other two unions.

“This would make our unions look bad, and Lederne could use it in their recruitment campaigns. This would make future negotiations with Norog really challenging, and escalate the conflict level on the shelf,” one union source told Upstream.

Ingvartsen told Upstream: ”IE and Safe must respect that Lederne is not satisfied with the result.”

Norwegian labour law provides for government intervention in union disputes only in cases of danger to life and health.

In 2012, however, a Labour-led government intervened due to the huge amount of revenue that might have been lost when Norog members were threatening a lockout.

Norway’s Labour Ministry has not responded to Upstream’s request for comment on these issues at the time of publishing.

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