KUWAIT: Kuwait’s state oil firm said yesterday it expects to restore full production within three days after workers 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 (KPC) and its subsidiaries on Sunday in a dispute over planned pay cuts had slashed the state’s output from 3.0 million barrels per day to 1.5 million and prompted a brief rally in world prices.
But early yesterday, the Kuwait Oil Workers Union announced its members were returning to work after what it called an “extremely successful” strike that had made the government pay attention to their concerns. Staff were already returning to work in response to the union’s call, KPC said, adding that operations at its installations were resuming. Company spokesman Sheikh Talal Khaled Al-Sabah said a gradual return to normal production of 3.0 million bpd “would take around three days”.
The union’s surprise announcement, which came just hours after its 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 on world markets. Prices “are coming under pressure again… after oil workers in Kuwait agreed to end their strike against wage and job cuts and work to return output to pre-strike levels”, said analyst Craig Erlam at trading firm Oanda.
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. “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.
HH the Prime Minister Sheikh Jaber Mubarak Al-Sabah met yesterday with the union’s leaders after they called off the strike. They discussed “the negative impact of the strike and halting production at the vital oil facilities in addition to losses” caused by the industrial action, said an official statement. The premier said the government would fully respect any right for employees under the law but it was not possible to “respond to any demands under the pressure of work stoppage and disruption to vital interests,” said the statement quoted by the official KUNA news agency.
The union has yet to comment on the talks. The workers’ demands include dropping plans to cut some benefits in the face of falling oil prices and excluding the sector from a new payroll scheme for public employees. Saleh, who is also finance minister, said the government had not yet implemented any decision regarding oil workers’ pay. The prime minister said KPC did not plan to cut its workers’ wages or their end of service indemnities. But he added that the company had decided to reduce future pay rises in line with spending cuts adopted in other state organizations.
He said that average monthly pay for oil sector staff in Kuwait was around $22,000, compared with about $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 their basic salary to 5.0 percent. 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.
MPs yesterday hailed the decision to call off the three-day strike. MP Ahmad Al-Azemi welcomed the initiative by the union to call of the strike and resort to peaceful talks to resolve the dispute. Azemi however insisted that he has not backed down on a request by himself and several MPs to hold a special parliamentary session to debate the oil strike and the workers’ demands. He said he and some MPs are trying to push for a negotiated settlement between the government and the workers that safeguards Kuwaiti national interests at the same time.
The special session was requested by 10 MPs for today to debate the rights of oil workers and their strike but the government rejected the request because it was not consulted before filing the request. MP Mansour Al-Dhafiri also welcomed the workers’ initiative to return to work, adding that negotiations are the best way to resolve any dispute. He said that all are required to give priority to national interests ahead of personal interests, adding that the workers’ initiative to call off the strike is evidence of their love and dedication to their country.
MP Ali Al-Khamees said calling off the strike will give MPs the motivation to defend the rights of workers, adding that he will oppose any measure to cut the benefits of the oil workers or other employees. MP Abdullah Al-Turaiji reiterated his calls for the resignation of KPC chief Nezar Al-Adasani after holding him responsible for the strike.
KUNA had reported that the unions ended the strike by praising HH the Sheikh Sabah Al-Ahmad Al-Sabah, and saying their action showed their “ability to affect the production process”. The unions “entrusted His Highness the Amir (with) the protection of rights of the employees in the oil sector,” the unions said, according to KUNA. It said workers wouldn’t be disciplined for taking part in the strike.
Adel Al-Fadhel, a spokesman for the Kuwait Oil Company Workers’ Union, confirmed workers went back to work yesterday. He said HH Sheikh Sabah spoke to the head of one of the unions Tuesday by telephone to assure his support for the workers. “We’re glad to announce that the strike has succeeded in preserving the rights of the workers in the oil sector,” Fadhel told AP. “His Highness the Amir intervened and guaranteed to preserve the rights of the workers according to the law.” Fadhel did not elaborate. The Amiri Diwan later denied HH the Amir spoke to any union official regarding the strike. Fadhel declined to immediately comment on the denial.
By B Izzak and Agencies