Sparkling wine instead of champagne, companies cancelling their Christmas celebrations, unemployment soaring and real estate prices flagging: with crude prices plunging from record highs, Norway’s oil capital Stavanger is hungover after the party.
“There you go, another rejection.” Roger Schurmeyer holds up the umpteenth job rejection letter he has received on his smartphone.
At 36, this former audiovisual solutions manager for Statoil has been out of work for almost a year, a victim of the state-owned company’s savings programme.
“I’ve heard there are about 300 or 400 people applying for the same job. So it’s a tough market,” he sighs.
The oil-rich southwestern region of Norway posts an unemployment rate of 4.1 percent, which looks enviable enough.
But it represents an 81 percent increase from a year ago, and, in a brutal change of fate, is now the highest in the country. Even (Taiwan OTC: 6436.TWO – news) headhunting firms are letting people go.
All because the price of a barrel of oil has plummeted from more than $100 in early 2014 to around $45 dollars today, inciting oil companies to slash investments and jobs.
Stavanger, once a cozy fishermen’s village, has become an opulent town of 130,000 residents after the 1969 discovery of Ekofisk, a giant offshore field still in operation that ushered Norway into an era of unprecedented prosperity.
A sign that the region has fallen on harder times, three oil services vessels now languish in the docks on the edge of town. And Scandinavian airline SAS (LSE: 0O1W.L – news) has just halted its direct flights to Houston, Texas — the United States’ oil hub.
“I check the oil price almost every day,” admits Christine Sagen Vestbo, the Conservative mayor of Stavanger since 2011.
When she began her first term, the town’s biggest problem was attracting enough engineers to fill all the job openings. It was the place in Norway where Porsche had its highest market share.
– Bleak outlook –
Now , the challenge is to hang on to and create jobs, as Norway tries to build a new future less dependent on black gold.
“I think it’s going to get worse in 2016,” says Vestbo.
“We have to develop more jobs in technology in general, in healthcare, in renewable (energy). We have the technology from the oil and gas industry, we can use that in offshore wind, in solar, and also of course in onshore wind,” she says.
At the Cafe de France, a high-end restaurant where a three-course menu served on Versace plates costs 70 euros ($75), the decline of the offshore sector’s glory days is palpable: reservations for companies’ annual Christmas dinners are down, and fewer businessmen are passing through town.
“There will always be business happening but companies have very strict guidelines now for when they can take customers out, and we see more people flying in and out instead of staying the night and dining,” the restaurant’s owner Emil Heimdal explains.
“Now we might cut the champagne, use Cremant de Bourgogne or another sparkling wine instead,” he adds. “We were probably living too high on the hog before.”
The same goes for the real estate sector. While comparisons are always difficult, the average square metre cost in Stavanger was until recently higher than in the capital Oslo.
But prices have fallen, especially since the end of the summer, and houses stay unsold on the market much longer, says Jan Georg Byberg, the head of a real estate agency in town.
“We have too many people wanting to sell and not enough buyers,” he says.
“The new thing is that people sell before they buy. The psychology has changed: you’re worried about what can you get for your own house.”
Meanwhile in Sandnes, on the outskirts of Stavanger, Schurmeyer says he is not stressing out about finding a job yet. But he plans to widen his search field.
“When you go 11 months without work, it changes you personally. I miss working.”