Potential strike in Norway drops oil production to lowest level in decades

Oil production in Norway is expected to drop in July as offshore workers, industry head to arbitration over benefits.

Although the Norwegian government?s decision to force arbitration averted a massive strike among offshore oil workers this week, oil production from Norway this month is expected to drop to its lowest level in 20 years.

UPI is reporting that the protest slowed the country?s production by 15 percent, and in its monthly oil market report, the International Energy Agency forecasts a decline by 400,000 barrels per day in July. The new level ? 1.6 million barrels per day ? is the lowest Norway has produced since 1991.

Several energy companies that are based in Houston, or have a significant presence in the Petro Metro, have interests in Norway production with assets in the Barents Sea, including Statoil ASA? ? Statoil ASA Latest from The Business Journals Oil up as Statoil plans production halt due to Norway strikeFMC Technologies signs 0M contract with StatoilChesapeake sale would be complicated, analysts say Follow this company (NYSE: STO), ConocoPhillips? ? ConocoPhillips Latest from The Business Journals Va. company to rebrand convenience stores as Circle KsPhillips 66 to distribute first-ever quarterly dividendHouston corporations get more female-friendly boards Follow this company (NYSE: COP), Exxon Mobil Corp? ? Exxon Mobil Corp Latest from The Business Journals Demand leads to bullish Houston multifamily market North Houston markets remain strong for industrial development Chesapeake ordered to pay 0M to Texas leaseholders Follow this company . (NYSE: XOM) and Marathon Oil Corp.? ? Marathon Oil Corp. Latest from The Business Journals In Colorado, Niobrara riches sparking tug of warHouston energy sector burns through cash reserves Marathon Petroleum to spin off pipeline business Follow this company (NYSE: MRO).

Norway is the largest oil producer and exporter in Western Europe, and the nation is the second largest exporter of natural gas in the region, after Russia.

More than 6,500 offshore workers were protesting restrictions on when they could retire; they sought to change the age of retirement from 65 years old to 62 years old. The government stepped in just before the strike got under way and demanded the sides go to arbitration instead.

I asked Morningstar Inc. analyst Allen Good, who covers Statoil and others, what?s next.

?I think that?s the big question,? he said. ?Obviously, the government has a lot of vested interest with its ownership in Statoil and maintaining its reputation as a reliable supplier to Europe for natural gas.?

Good said that what?s most likely to happen at this point is the parties will come up with an amicable resolution.

?Everyone?s got a little interest in this,? he said.

Deon Daugherty covers energy and law for the Houston Business Journal.

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