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Image courtesy of the Norwegian Oil and Gas Association.

Talks between energy companies operating in Norway and offshore worker unions have fallen apart over a rift tied to wage demands.

According to Bloomberg, scheduled wage talks between the energy firms offshore worker unions broke down within minutes on Monday.

A group of drilling and rig companies represented by the Norwegian Oil and Gas Association declined to offer wage increases as the oil industry continues to struggle with low prices.

“We’re in a very challenging situation. It will get worse before it gets better,” Norwegian Oil and Gas Association spokesman Kolbjoern Andreassen told Bloomberg.

Negotiations will continue with help from the country’s National Mediator but no talks have been scheduled yet.

No strike actions have been announced yet.

The Norwegian Oil and Gas Association said on Monday that the offshore worker talks were terminated by a formal breach with two of the unions after the third union had staged a walk-out.

The association said the Norwegian Union of Industry and Industry Energy opted to leave the talks before the two sides had presented their negotiating positions.

The association added that the Norwegian Union of Energy Workers and the Norwegian Organisation of Managers and Executives submitted their demands in the normal way but they also decided eventually to break off negotiations.

“Our position is that we must adapt to a lasting reduction in the level of costs while simultaneously improving our competitiveness to preserve as many jobs as possible,” lead negotiator for the Norwegian Oil and Gas Association Jan Hodneland said.

Updated figures from Statistics Norway released earlier this month show that investment on the Norwegian continental shelf will decline from NOK 189 billion in 2015 to NOK 166 billion this year and NOK 153 billion in 2017.

The decline is attributed to persistently low oil prices and increasing operation costs in the region.

“This means our member companies are experiencing demanding times. They’re in the middle of a restructuring process with extensive downsizing. Pay settlements we reach must contribute to improving adaptability and competitiveness on the NCS,” Hodneland said.

The offshore agreements are the third of four sets of collective pay deals being negotiated by Norwegian Oil and Gas this year and the second to go to mediation.

“Talks on the land base agreements broke down two weeks ago, while agreement was reached with employees on land last week,” the association added.

The offshore agreements cover about 7,500 employees in the following companies: Statoil, Norske Shell, BP Norge, ESS Support Services, Esso Norge, Sodexo Remote Sites Norway, KCA Deutag Drilling Norge, Talisman Energy Norge, Engie E&P Norge, ExxonMobil, ConocoPhillips, Wintershall, Coor Offshore, Eni Norge and Lundin Norway .

Industry Energy, one of Norway’s largest oil worker unions, said last Wednesday that it is hopeful a strike can be avoided.

“Industri Energi is well aware that the oil industry is going through a very difficult period. We therefore went to the negotiating table with moderate claims and expectations,” the union added.