In the midst of the Norwegian oil industry’s major downturn, one of the country’s major labour organizations is lobbying the state hard to pump up more work to preserve jobs. Some of it actually includes permanently plugging oil wells, but Oil Minister Tord Lien resists the idea and says oil companies need to make those kinds of decisions themselves.
“It’s up to the oil companies to decide which wells should be plugged,” Lien told newspaper Dagens Næringsliv (DN) on Tuesday. He was also clear, when attending an oil workers’ rally in Stavanger last week, that the state can help provide predictable tax regulations, provide funding for petroleum research projects and dole out oil and gas explorations licenses in Norwegian sectors of the North-, Norwegian- and Barents seas. The oil companies themselves need to do the rest, Lien believes, and tackle the downturn as best they can.
Not up to the state
“The oil industry is extremely important in financing the welfare state,” Lien told DN. But it’s difficult for politicians, he added, to “even-out” activity levels during upturns and downturns. That’s also up to the oil companies and their roles as employers, and it’s also their responsibility, according to Lien, to control their costs.
Leif Sande, leader of the labour organization Industri Energi, which represents thousands of oil sector workers, isn’t satisfied. He clearly wants the state to take more responsibility itself. He now wants the state to help preserve and even create more oil sector jobs by offering tax incentives to increase oil activity, to improve labour regulations to better provide for laid-off workers, push for new job creation through rig maintenance and well-plugging, and move forward with an evaluation of opening up new offshore areas for oil exploration around scenic Lofoten and Vesterålen.
Plugging could ‘hinder value creation’
Sande, backed by other trade union federations, opposition politicians and environmental organizations, has also stepped up efforts in the past week to unleash contracts for as much as NOK 900 billion (more than USD 100 billion) worth of well-plugging work. They advocate putting idle oil rigs back into service by plugging old oil and gas wells, since there’s no exploration work going on at present.
State authorities are as skeptical as Lien, arguing that plugging could “hinder value creation.” Sande is most concerned with stimulating offshore activity that would provide offshore jobs.
DN reported last week that oil industry investment, which has taken a dive since oil prices dove themselves last year, looked likely to fall some more next year. The industry’s own trade association, Norsk olje og gass, unveiled some predictions that were more pessimistic than other industry and state predictions have been. The industry thinks the downturn will continue into 2017 and may never return to the heights of recent boom years.