Striking a Deal: TotalEnergies Faces Unite Union Strike Ballot Uncertainty in 2025

The UK’s Unite union has ignited a labor dispute with TotalEnergies, one of Europe’s largest oil and gas producers, over pay increases for offshore workers in 2025. With strike ballots concluded in 2023 and 2024 but outcomes unresolved, investors face a critical question: Will a potential strike disrupt TotalEnergies’ operations, or will negotiations avert a costly showdown? This analysis dissects the stakes, risks, and implications for stakeholders.

The Dispute: A Clash of Interests

The conflict centers on TotalEnergies’ proposed 2025 pay increases of 1.5% (later revised to 1.75%), which Unite rejects as “real terms pay cuts” amid inflation and record company profits. The union represents ~70 workers on the Elgin Franklin, North Alwyn platforms, and the Shetland Gas Plant, roles critical to production, maintenance, and safety. These workers operate in environments where even short disruptions can halt oil/gas flows, making their bargaining power significant.

Operational Risks: A Potential Production Shock

A successful strike could disrupt TotalEnergies’ North Sea operations, a key revenue source. In 2023, the North Sea contributed ~19% of Total’s global production (484,000 barrels of oil equivalent per day). The Elgin Franklin alone handles 40,000 bbl/day, while the North Alwyn platform produces 25,000 bbl/day. A prolonged strike would strain Total’s ability to meet production targets, potentially forcing reliance on costlier alternatives or storage withdrawals.

Financial Implications: Profits at Risk?

TotalEnergies reported a $20.5B net profit in 2022, but 2023 earnings fell to $13.7B due to lower oil prices and higher inflation. A strike could further compress margins:
- Direct Costs: Lost production could reduce revenue by $50–100M/month (based on $80/bbl Brent crude).
- Indirect Costs: Restarting platforms post-strike often requires safety checks and repairs, adding 1–2 weeks of downtime.
- Reputation Risk: A prolonged strike might damage Total’s ESG credentials, a priority for investors in the energy transition era.

The Broader Industry Context: A North Sea Tsunami?

This dispute is part of a wider labor wave. In April 2023, 1,350 offshore workers across BP, Shell, and others staged strikes, causing a 10% UK oil production drop. Unite’s Sharon Graham has warned of a “tsunami” of actions, suggesting Total’s workers may join broader sector-wide demands. This raises systemic risks:
- Supply Chain Contagion: A Total strike could pressure rival firms to preemptively raise wages to avoid similar disputes.
- Energy Security: UK gas storage levels were ~55% in early 2024, below the EU average of 65%, leaving little buffer for disruptions.

TotalEnergies’ Strategy: Negotiation or Standoff?

Total has signaled openness to talks, stating it “remains committed to negotiating” even as it rejects Unite’s demands. Management may prioritize avoiding strikes to protect its 2025 capex plans ($15B allocated, with ~$3B for North Sea projects). Potential compromises could include:
1. Indexed Pay Hikes: Linking raises to inflation or oil prices.
2. Workforce Retention Bonuses: To address retention challenges in a tight labor market.
3. Hybrid Shift Rota Flexibility: Addressing worker grievances over rigid three/four-week shifts.

Investor Takeaways: Monitor the Ballot Outcome

The key unknown is the strike ballot’s result. If approved:
- Short-Term: TTE’s stock may dip (as seen in 2023 when oil majors fell 5–8% on strike fears).
- Long-Term: Production losses could pressure 2025 EBITDA (currently guided at $29–32B).

If averted:
- Stability: TTE’s stock could rebound, benefiting from higher oil prices and renewed investor confidence.

Conclusion: A Delicate Balancing Act

TotalEnergies faces a pivotal test balancing labor costs, production stability, and shareholder returns. With the North Sea strike ballots concluded but outcomes pending, investors should:
1. Track TTE’s stock volatility (historically sensitive to operational risks).
2. Monitor North Sea production metrics (e.g., UK Oil & Gas Authority reports).
3. Watch for union/management statements post-ballot results, likely announced by mid-2024.

The stakes are high: A strike could cost TotalEnergies billions in lost production, while a negotiated settlement might avert short-term pain but set precedents for future labor costs. For now, the market waits—and investors must too.

Final Verdict: TotalEnergies’ operational resilience hinges on averting a strike. Investors should remain cautious until clarity emerges, but the company’s diversified portfolio and strong balance sheet ($20B net cash) provide a buffer against short-term headwinds.