After fruitless mediation on 8-9 June, 114 Safe members in Baker Hughes downed tools since the OLF could not accept a settlement which gives them other terms than the rest of the industry.
After Baker Hughes and BJ Services merged, the local agreement on pay and conditions in BJ Services was cancelled pursuant to the rules in chapter 16 of Norway's Working Environment Act.
As required by the Act, the company had discussions in October 2011 with the former BJ Services workforce on cancellation of the agreement.
The 114 former BJ Services employees retained the individual employment contracts they held when the business was transferred.
Bound by existing agreements
When the local agreement expired, Safe contacted the OLF in order to negotiate an agreement covering pay and conditions on behalf of its members.
The OLF is bound in such cases by the oil service agreement concluded between it and the Confederation of Norwegian Enterprise (NHO) and Industry Energy/the Norwegian Confederation of Trade Unions (LO).
This states: “As long as this agreement on pay and conditions remains in force between the organisations, none of the parties may conclude new agreements for other companies doing work within the area covered by the agreement containing provisions on pay and conditions which deviate from the provisions in this agreement.”
The current oil service agreement between the OLF/NHO and Industry Energy/LO embraces more than 4 500 employees, including some 600 other employees in Baker Hughes.
The deal offered by the OLF to Safe has corresponded to the terms detailed in the existing pay agreement for the oil service area.
As long as the 114 Safe employees in Baker Hughes are not covered by a pay agreement of their own, the terms in the oil service agreement also apply to them.
During the mediation process on 8-9 June with Safe, the first day was devoted to negotiating an agreement on safe and acceptable completion of operations which would be hit by a possible strike.
On day two, Safe called for the former agreement to be continued. The OLF offered a deal similar to the existing oil service agreement. This was rejected by Safe and the strike began.
The strike could impose extra costs of up to NOK 30 million per day on the companies and society as operations have to be suspended.
Various installations and rigs will be affected because drilling must cease, and the price tag will rise substantially in the longer term. Production is not affected at the moment.
The following installations/rigs will be affected by the strike at Baker Hughes Norge AS
Rig /Installation Well Operator Consequence
Songa Trym 31/5-O-25 Y1H Statoil Operation will cease after well is secured according to procedure, estimated June 18th
Stena Don 31/2-Y24 Statoil Might have consequence for upcoming P&A work.
Songa Dee 31/5-K-4 Statoil No consequence
Oseberg C C-25 Statoil Possible well control issue, unless work can continue
Oseberg Øst 30/6-E-14 Statoil Operation will cease after well is secured according to procedure, estimated June 25st
Brage Statoil No consequence – maintenance stop
Gullfaks C C-19/C-3 Statoil Limited consequences, operation most likely to continue
Transocean Winner 24/6 Marathon Operation will cease after well is secured according to procedure, estimated June 16th
West Alpha 6506/11 Centrica Operation will cease after well is secured according to procedure, estimated June 14th
Songa Delta 33/6-3S Suncor Operation will cease after well is secured according to procedure, estimated July 5th
West Navigator Shell Operation might be hindered after June 18th.
Ringhorn Exxon Limited consequences
Scarabeo 8 Odden Eni/Statoil/Halliburton Limited consequences
Facts about Norwegian pay agreements
An agreement on pay and conditions in Norway is reached between a union and an employer or employer organisation. Generally speaking, part I comprises a basic agreement, while part II details the specific settlement and special provisions related to the latter.
The agreement must be in writing and contain provisions on expiry and deadlines for cancellation. It must be cancelled in writing. Industrial action is not permitted for the duration of the agreement.
A basic agreement forms the first section of all Norwegian pay deals established between the organisations (the NHO and the LO/ Confederation of Vocational Unions - YS) covered by the basic agreement.
These basic agreements define the fundamental rules for work. They contain general provisions on negotiations and collaboration between employer and employee, but do not regulate pay.
Normally applying for four years at a time, the basic agreements provide the framework for regulating other settlements.
The OLF/NHO have the following agreements on pay and conditions in the oil and gas industry