More than 700 oil workers went on strike in Norway on Sunday after pension negotiations broke down, prompting production closures which could cost tens of millions of dollars per day, the employers' organisation said.

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The strike which started at 4am (0200 GMT) on Sunday involved employees of Norwegian oil group Statoil, British oil giant BP's Norwegian division and ESS Support Services, which is owned by the British Compass Group, the Norwegian Oil Industry Association (OLF) said.

The stoppage will cut oil and gas production at Statoil's Oseberg and Heidrun fields in the North Sea, OLF said, adding though that it would take four to five days for both fields to shut down.

It will also postpone work on getting the BP-ESS-run Skarv field into production, which is scheduled for the second half of the year.

"That could have an impact on production start-up, reservoir utilisation and other planned operations," the statement said.

"The unions are imposing substantial costs on the companies and Norwegian society," Jan Hodneland, OLF's chief negotiator, said, adding that "the strike will cost roughly 150 million kroner ($25 million) per day, so it will not take long before the bill tops 1.0 billion kroner."

The strike began after two days of talks broke down over employers' refusal to change its decision to cut a pension add-on for employees who retire at 62, three years ahead of the general age for oil workers and five years ahead of Norway's official retirement age, the SAFE and Industri Energi unions explained in a joint statement.

"We will not let employers rob us of our pensions. That's why we are striking," union chiefs Hilde-Marit Rysst and Leif Sande said, pointing out that the slashed payment system had been in place since 1998, calling the employers' organisation "arrogant".

OLF's Hodneland denounced the unions' demands as "completely unreasonable."

"Oil company employees have an average annual income of 1.0 million kroner and a retirement age of 65. This already makes them Norway's pension winners," he said, bemoaning that the unions "nevertheless opted to use their power to win even better terms."

Unions can opt to step up the strike or employers can choose to implement a lockout at four days notice, OLF said.