Talks between engineering firm Wood Group and two unions over pay cuts and changes to allowances have resulted in a "mutually agreeable proposal," it has been announced.
Nearly 400 workers in the RMT and Unite unions staged strikes earlier this summer over up to 30% pay cuts and changes to allowances. The workers work for Wood Group on oil major Shell's assets in the North Sea.
The strikes, over 24 hours and then 48 hours, in July and August, were the first in 28 years. The decision to strike followed a 99.1% vote in favor of strike action by a majority of Unite members, and a 98.5% vote in favor by a majority of RMT members.
Further strike action was averted when the parties agreed on 11 August to allow fresh talks to start.
This afternoon, Wood Group said that, following a series of in-depth discussions, Wood Group representatives, officials from the Unite and RMT unions and shop stewards had drawn up a mutually agreeable proposal, "which we consider to be in the best interests of all parties."
"The new proposal recognizes the skills, flexibility and capabilities of the incumbent offshore workforce, the challenges facing the industry and demonstrates collective leadership in shaping the future of the North Sea," Wood Group said.
"We are currently in contact with all our offshore workers who are involved, to set out the terms of the new proposal, together with what it means to each individual’s terms and conditions. The Unite and RMT unions will begin balloting their members next week."
Paul Goodfellow, Shell UK and Ireland Upstream Vice President said: “Shell is pleased with this proposal and looks forward to working with Wood Group, Unite and the RMT to ensure that the North Sea remains competitive.”
The industry has had to make cuts amid a fall in the oil price from a US$110/bbl high in 2014, to below $40/bbl earlier this year.
According to analysts Wood Mackenzie, operators have managed "dramatically tighter cash flow management." According its analysis, 56 oil firms will achieve cash flow neutrality at an average price of around $50/bbl. "This is some achievement given the majority needed over $90/bbl in 2014," says Tom Ellacott, senior VP of corporate research at Wood Mackenzie. However, it's been at the expense of deep cuts in capital investment, which will damage growth prospects, says Wood Mackenzie.
Read more