A recent rash of job cuts in Norway’s once-booming oil sector is now leading to concerns that offshore installations won’t get the monitoring and maintenance they need to stay safe and prevent accidents. “I’m worried that they (the oil companies and oil service firms) don’t understand the consequences of the cuts they’re making,” one of Norway’s top petroleum industry regulators said on national radio on Monday.
Anne Myhrvold, director of Petroleumtilsynet (Petroleum Safety Authority Norway), said she’s afraid that a lack of maintenance on Norwegian oil platforms will continue to increase, and in a worst case scenario, end with an accident. “It’s clear that’s the ultimate consequence is a major accident,” Myhrvold told Norwegian Broadcasting (NRK), adding that minor accidents are also worrisome.
Oil service firms that repair pipes and look for rust damage on oil platforms, for example, have been cutting staff in recent months because the oil companies themselves are cutting costs. Newspaper Dagens Næringsliv (DN) has reported that more than 4,300 jobs in the oil branch have already disappeared and more cutsare expected. On Monday, DN reported that the cuts are also now affecting engineers, who also have abruptly moved from being those able to demand the biggest pay packages to those losing out in pay growth this year. Nor is it as easy now for engineers to find or keep jobs in the oil sector.
More idle rigs and rising costs
At least 15 drilling rigs are due to become idle next year, as oil companies cut back on exploration, and that can mean the loss of as many as 13,500 more jobs, reported newspaper Stavanger Aftenblad late last week. North Atlantic Drilling, for example, laid off 250 workers and the ripple effects are considerable. Around 100 cooks and cleaners who also work on the rigs are losing their jobs as well.
DN reported that other companies like Kaefer Energy at Forus outside Stavanger, which specializes in maintenance and modifications of oil rigs, were sending out more lay-off notices, too, and that’s what’s worrying the authorities and labour unions most of all. Kaefer is cutting 100 jobs in accordance with the cuts made in Norwegian state oil company Statoil’s maintenance and modifications budget. Kaefer boss Bård Bjørshol figures Statoil’s cuts will mean that his firm’s revenues will likely fall by 20 percent, from around NOK 1 billion this year to NOK 800 million next year. In the course of just one year, he noted, the industry has turned upside down. At Bilfinger, another company that repairs rust damage on rigs among other maintenance, around 600 jobs were cut along with around 210 temporary workers.
“It’s not just Statoil’s cuts,” Bjørshold told DN. “This is happening at all the oil companies.” He doesn’t think it’s a passing phase either: Rising costs have forced the oil companies to cut back at a time when oil prices are on the decline. Statoil has also cut its investment budget but insists tighter budgets may actually strengthen platform maintenance. “We live off of operating … in a safe and secure manner,” Statoil spokesman Morten Eek told DN, adding that Statoil wants to maintain and strengthen its follow-up of technical conditions at its facilities.
‘Not speculating on safety’
Less maintenance and fewer modifications on platforms that are still operating concerns not just Myhrvold of the petroleum safety authority but also the suppliers’ organization Norsk Industri and the labour organization Industri Energi. They claim the cuts have come too swiftly and that cuts in maintenance are not a good strategy.
Others downplay the current cuts, arguing that worries also gushed when the industry was in a high state of activity. Industry spokespersons claim that the oil companies remain vigilant in maintaining safety on the rigs and aren’t speculating with less maintenance. “We are absolutely certain that the companies are ensuring safety even though they’re making cuts,” Maiken Ree in industry association Norsk olje og gass (Norwegian Oil and Gas) told NRK.
Myhrvold wasn’t entirely comforted. “It’s especially during a period of cost-cutting when it’s extra important to avoid any neglect of maintenance,” Myhrvold said. “We will therefore direct our greatest attention on this area.”