Kuwait’s state oil firm said Wednesday that it expects to restore full production within three days after staff ended a strike in a surprise about-turn that triggered a renewed slide in world prices.

The walkout by thousands of staff of Kuwait Petroleum Corp. and its subsidiaries on Sunday in a dispute over planned pay cuts had slashed the emirate’s output from 3.0 million barrels per day to 1.5 million and prompted a brief rally in world prices.

But early on Wednesday the Kuwait Oil Workers Union announced that its members were returning to work after what it called an “extremely successful” strike that had made the government pay attention to their concerns.

The surprise announcement, which came just hours after union leaders had vowed to continue the strike until all their demands were met, quashed hopes the disruption could help ease a persistent supply glut and saw oil shed nearly a dollar in Asian trade.

At around 0730 GMT, US benchmark West Texas Intermediate for May delivery was down 99 cents, or 2.41 percent at $40.09 a barrel while Brent crude for June fell 98 cents, 2.23 percent, to $43.05.

KPC spokesman Sheikh Talal Khaled Al-Sabah said that staff were already returning to work in response to the union’s call and that operations at the company’s installations were resuming.

A gradual return to normal production of 3.0 million bpd “would take around three days,” he said.

The climbdown by the union came after an appeal by acting oil minister Anas al-Saleh on Tuesday night for staff to return to work so that negotiations could be held on their demands.

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“We cannot sit at the negotiating table while the strike is still going on. Return to work and come and negotiate,” he told the private Al-Rai satellite television.

– Talks on union demands –

Al-Jarida newspaper said worker representatives were expected to meet Prime Minister Sheikh Jaber Mubarak Al-Sabah on Wednesday for talks on resolving the dispute.

But union leaders declined to comment on the report when contacted by AFP.

“In respect for the emir and in loyalty to him… we have decided to cancel the total strike,” said a union statement posted on its official Twitter account.

“We trust the emir… for the protection of the rights of oil workers.”

It called on management to take no disciplinary measures against staff who had gone on strike.

The workers’ demands include dropping plans to cut some benefits in the face of falling oil prices and excluding the oil sector from a new payroll scheme for public employees.

Saleh, who is also finance minister, said the government has not yet implemented any decision regarding oil workers’ pay.

He said KPC did not plan to cut its workers’ wages or their end of service indemnities, but said the company had decided to reduce future pay rises in line with spending cuts adopted in other state organisations.

He said that average monthly pay for oil sector staff in Kuwait was around $22,000, compared with around $4,200 for civil servants.

Saleh said that KPC planned to cut the annual pay rise received by its staff from 7.5 percent of basic salary to 5.0 percent.

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Kuwait posted budget windfalls for 16 consecutive fiscal years due to high oil prices but posted a budget deficit in the 2015/2016 year which ended March 31.

For the 2016-17 fiscal year, it projects a record deficit of $38 billion, equivalent to 30 percent of gross domestic product.

Kuwait has liberalized the price of diesel and kerosene and is considering cutting subsidies on other services.

But it is facing difficulties in cutting spending which has increased more than fourfold since 2006, mostly on wages and subsidies.

 

AFP

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Russ Arnett
Russ Arnett
2016-04-20 19:11

more fuel for terrorists