Will industrial action save the North Sea from cutting itself into oblivion?

If you’ve ever been involved in industrial action you’ll be well aware that what you’re being asked to participate in has to be thought through very carefully or it could backfire spectacularly.

The UK North Sea isn’t like the Norwegian sector, where unions have historically very successfully bargained for better conditions and rotations.  A visit to a Scandinavian platform, or even to certain drilling rigs, starkly differs from the likely experience of a visitor to UK waters.  Rotations typically fall into the 2 weeks on and 3 weeks off category, but in some cases the Scandinavians have bargained for a truly comfortable 4 weeks off.  Even some oil service companies offer rotations whereas in the UK a rotation with a service company is rare, if it even exists.  Cabins are commonly single in nature – not exclusively though – with beds instead of bunks, and that comfort offers back the privacy that can be yearned for when you’re at sea for a time.

Two glaring questions spring to mind directly from the Scandinavian examples:  Firstly, just how did they get such desirable conditions?  And secondly, is new industrial action in a downturn going to solve any of the UK North Sea’s ills or will it usher in the decommissioning phase and close the region down forever?

So on the first point, I wouldn’t imagine the legendary Norwegian sector won their conditions through good will from oil executives.  Offshore oil companies will offer conditions that are acceptable to the populace of the region they want to extract oil from, in line with local governmental employment law.  In fact, ANY company follows this pattern.  That’s why European and North American factory production has left for the cheaper labour of Asia and the far east; Chinese and Bangladeshi and Indian and Taiwanese people and governments will accept lesser terms, conditions, environmental responsibility, and safety standards.

But what is pivotal in the case of oil and gas differing is that there are a limited number of near-shore shallow waters with stable local governments dotted across the globe.  Sure, fields could be drilled throughout the world’s flash-point regions or in ultra-deep waters with relative ease and companies could employ and train skilled locals willing to work for a fraction of the salary of the North Sea, but the risk of operating in that flash-point region is high both environmentally and with respect to the security of expat and indigenous employees.  Look no further than Nigeria, where early 2016 saw severe instability emerge unexpectedly.

So what to consider on point one – “how did they get those conditions?”- is that the Norwegians collectively saw the value in their oil and their geography and gambled that oil companies desired the region so much that they could bargain for a few home comforts while they were round the table.  It’s a simple matter of courage and self respect.

On question two – “will industrial action cure any of the North Sea’s ills, or will it usher in decommissioning?” – the answer is already written in stone.  The only organisation that has the levers to cure the UK North Sea’s ills is your government.  The UK chose to sell British Petroleum in the 1980’s and with it lost genuine control of offshore operations, leaving the sector to the whims of the stock markets and the market confidence of the oil companies.  The remaining lever that can be fiddled with – tax incentives – recently back-fired horrendously in early 2016 when the UK gave back £83 million in tax rebates to a single oil supermajor.  The UK government’s folly most certainly won’t usher in decommissioning though.  The oil companies will manage that just fine when the region is seen ultimately to be too expensive to operate in.  But then… it’s very stable and reliable, and is a point of consolidation when war breaks out elsewhere.

So to touch on this article’s title, just what will industrial action do if it enters the ring?  Rather than me manipulating you with my opinions, ask yourself this: what are the sensitive nerves the oil companies are poking to twitch their workforces into order to claw back hard fought-for terms, conditions, and salaries?  I’ll bet firstly it’s the prospect of further job cuts.  The prospect of ushering in an era of decommissioning will hotly follow.  And then… oh wait… that is their two sticks they can whack.  And whack they have.

Is it likely that once forfeited you’re going to regain your pre-downturn salary at the point of oil price recovery?  What magical dollar value is that anyway?  Is it a possibility that if you keep your head down and give up three, four, six, or eight thousand per year from your salary that the effect will be to keep your platform pumping for years to come or your rig drilling away happily in the horizontal rain?  No, it isn’t.  The platforms will reach their viable maximum and be decommissioned anyway, and the rigs will either be stacked or drill to their end of viability, and that is the pre-destined order of things.

But each person has their family to worry about and their bills to pay under wildly differing circumstances so the threshold where one person says “enough is enough” and where another person says “I’m lucky to have a job” is individualistic, and that should be remembered when results may not go your way.

One threshold stands out that seems to have been lost on the oil companies though, and that is the circumstance where an oilfield worker says “Know what?  The money isn’t that good any more.  I’m gonna get a normal job”.

With 30% wage cuts for some offshore employees on the horizon, and other industries offering annual rises, that position is gathering momentum.

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Related stories:

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North Sea equilibrium, and the hidden winners.

So how DO you get a job offshore? It’s all in the contacts.

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