Equinor closes three fields as Norwegian strike starts

Equinor has initiated the shutdown of the Gudrun, Oseberg South and Oseberg East fields, after members of the Lederne trade union went on strike at 00:00 local time on July 5, over a wage dispute. The industrial action could be extended to other facilities if a settlement deal is not reached, potentially knocking out 13% or more of Norwegian gas supply, at a time when Europe is already struggling with soaring prices as a result of cuts in Russian shipments.

The strike has resulted in a loss of 89,000 barrels of oil equivalent/day of Norwegian hydrocarbon production, of which 27,500 boe/d is natural gas, Equinor said. If negotiations fail to make progress, the strike will be extended to workers at the Heidrun, Kristin and Aasta Hansteen fields on the night before July 6. Equinor confirmed it would have to shut down production at these fields as well, along with the Tyrihans field that is tied to the Kristin platform.

These extra fields produce around 330,000 boe/d, of which 264,000 boe/d in natural gas. Taking into account lost output at the three fields already offline, the Norwegian Oil and Gas Association has warned that 130,000 b/d of oil and 292,000 boe/d of gas supply will be shut in if the strike moves to this second phase.

This means 13% of total Norwegian gas production will be offline. Europe is already grappling with a spike in gas prices and a steep reduction in Russian gas supplies, as part of the fallout of Moscow's invasion of Ukraine. Gazprom has cut gas supply off to a number of customers because they refused to comply with its rubles-for-gas decree, and said in mid-June it was reducing flow via the Nord Stream 1 by up to 60%. The company cited technical difficulties, including Siemens' failure to return equipment at a compressor station on time that had been sent off for repairs, although European leaders have said they believe the reduction is politically-motivated.

Furthermore, the strike could be extended again on July 9, to include workers at the Sleipner, Gullfaks A and Gullfaks C fields, but Equinor said the consequences of this escalation were not clear.

The August contract at the Dutch TTF hub was up a further 6.5% as of 09:00 GMT on July 5, trading at €173.55 ($179)/MWh, building on successive gains it has been making every day since late June. In contrast, it was trading at only €129.3/MWh on June 24.