Offshore industries are not safe from the summer of strikes. Since the pandemic eased, workers have walked out of work seeking better conditions as economies stutter. The pandemic has empowered employees to demand more, and oil and gas companies have already seen big movement from unions. They will see more before the end of the year.
The Richmond Refinery Strike
The first rumblings of the storm were heard in the US, at Chevron’s Richmond Refinery in California. The refinery maintains a throughput of approximately 240,000 barrels of oil-equivalent per day (boepd). In 2021, Chevron produced approximately 3.1 million boepd, of which approximately 8% came from Richmond.
Go deeper with GlobalData
After Chevron’s contract with employees in the United Steelworkers (USW) union expired at the end of January, negotiations started. After working up to 70 hours per week during the pandemic to keep production lines flowing, workers had reached their limit. They demanded higher wages, shorter hours, and increased health and safety protections.
Two rejected offers later, more than 500 workers halted work on 20 March. Posturing quickly started, with the local USW vice president BK White saying no new contract talks were planned. He said: “It’s hard to negotiate when one side sees flesh and bone and other side sees the bottom line.”
At the same time, spokespeople for Chevron said the union had “exceeded what the company believes to be reasonable”. Both sides dispute whether the strike counts as an “Unfair Labour Practice Strike”, which would imply that Chevron had broken labour laws.
One week later, talks resumed. Chevron and USW swapped offers and counteroffers, but with no agreement. Chevron pointed to its losses in 2020, emphasising that it did not pass these on to employees via furloughs or pay cuts. The union highlighted the “sacrifice” made by workers throughout the pandemic.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataChevron’s main website, press releases, and company reports made no mention of the strikes as they continued. The website of the Richmond Refinery maintained a page to outline the company’s stance, while the union said little after its initial strike announcement.
“This strike is an outlier”
Throughout the strike, Chevron aimed to reassure stakeholders that the strike is “an outlier”, given that unions accepted the terms of all other contracts up for renewal. A Chevron statement said that the company remained “committed to continuing discussions”.
The strike continued for 10 weeks, until the union and Chevron agreed a new deal on 28 May. Workers received a 12% salary increase spread across 4 years, in line with the agreement between USW International negotiators and refinery owners in other contracts renewed in the months before the strike.
The final agreement between Chevron and the USW chapter did not include healthcare contributions. Although union bosses had originally committed to obtaining these, more than 60 workers had crossed the picket line by the time of the agreement. The final deal seemed like a reasonably small win for workers and the union. However, the strike escalated the scale of industrial action early in the year. Now, the number of workers downing tools has made mid-2022 “the summer of strikes”.
What has caused strikes to step up?
Commentators have pointed to many reasons behind the momentum. The Covid-19 pandemic caused many to reassess their work/life balance, quite strenuous or disliked jobs, or consider a career change. In office jobs, the move to working from home empowered workers to optimise their jobs without direct oversight. While this cannot be said of on-site work, these roles more often include unionisation and collective bargaining for a better work experience.
Furthermore, the new biosecurity practices adopted in many on-site jobs made work more troublesome or strenuous, generally without compensation. This has empowered site workers to demand better pay, hours, and conditions.
The overall movement has empowered workers to demand more, and with a rising cost of living across the Western world, unions have chosen to act now. Tougher economic conditions provide both and opportunity and motive to demand for pay rises to balance the books. The trials of work during the pandemic have provided a persuasive case for most industries: a means to persuade both executives and the public of why good labour must cost more.
While oil and gas may have kicked the strikes off, they have spread through related industries. After the pandemic pulverised the international travel industry, airport workers have widely moved toward industrial action. In France, Germany, the UK, and Spain airport staff have balloted for action, although negotiations have often prevented walkouts.
In the US, retail and hospitality workers have made their first steps toward unionisation, despite fierce resistance. Amazon hired well-known “union-busters” to prevent warehouse workers from forming unions at several of its key sites. Despite US President Joe Biden’s encouragement for the movement, union pushes have had mixed success. A similar story has played out at Starbucks, alongside other store chains across the country.
The UK has seen much wider-ranging strike ballots, from rail and bus workers, to barristers and teachers. Although some of the striking unions include offshore workers, the UK shelf has not yet seen significant movement towards industrial action. Meanwhile, engineers on the other side of the North Sea have chosen a different path.
Government intervenes to prevent strikes in Norway
In Norway, offshore workers threatened strike action in early June, seeking pay rises and undisclosed contract changes. Negotiations and a new deal prevented immediate action, but two of the three labour unions have not ruled out later strikes.
One month later, strikes caused three offshore fields to pause operations, reducing production by 89,000 barrels per day. Strikes began on 4 July, with the Lederne union announced the next day that industrial action would soon extend to encompass fields producing 333,000 barrels of oil equivalent per day.
The day after that, the government intervened to forcibly end the strikes, as it can under Norwegian law. Government labour minister Marte Mjøs Persen said: “We normally exercise significant restraint before intervening with compulsory wage arbitration. However, the serious consequences of the announced escalations have forced my hand.”
The union must now accept the same deal accepted by other unions. Lederne previously rejected a 4%-4.5% pay rise, compared to annual inflation of 5.7%. Responding to the intervention, a statement from Lederne leader Audun Ingvartsen called the decision “disappointing” but stood by the union’s choice.
A statement from oil industry trade body NOG said: “We are glad to see that the government understood the seriousness of the situation and acted to uphold Norway’s reputation as a reliable and stable supplier of natural gas to Europe.”
Ultimately, strikes live and die based on their public support. The economic conflict between European democracies and Russia following the country’s invasion of Ukraine has increased the importance of steady oil and gas supply on the continent, and the public knows it. As a result, pushes for better working conditions come across poorly to most consumers, making industrial action less likely and less successful. However, this suppressing effect does not extend worldwide.
Where Norwegian strikes stop, Australian strikes start
In Australia, European wars occupy less space in the public consciousness, and strikes have escalated. Workers on Shell’s floating production vessel Prelude, the largest on Earth, timed their 12 July strike to cause the company to shut production down almost immediately, as storage tanks neared capacity.
Staff with the Australian Workers Union planned to strike until 21 July, but after voting to extend this into August, Shell moved to dock pay and lock them out of facilities. Union spokespeople say that the company cannot do this while staffing the vessel within the conditions of its license, and at the time of writing, the dispute continues.
The company has refused to meet with union representatives during their strike. Spokespeople for Shell have said that the shutdown of the unit means the company “cannot continue to operate in the same way”.
Union national secretary Daniel Walton said that a lockout would represent a “catastrophic failure of management and an indictment on Shell as a company”. The union accused Shell of “stonewalling and unnecessary aggression and escalation”.
The strikes and lockout continue. As global economic conditions stress both sides, strikes seem more likely on the road toward winter in the northern hemisphere. Before then, at least temporarily, power remains with workers. Many will choose not to strike, but for some the Prelude strike will mark the start of an industrial action crescendo.
