North Sea oil has brought prosperity and wealth to Stavanger and other once-stagnant fishing towns along the harsh Norweign coast, but now it has also brought anguish and death.

Families that used the earnings from the demanding work on the rigs to brighten their homes and their lives are suddenly mourning the deaths in the world's worst offshore oil disaster.

Flags are lowered throughout Norway and yesterday, declared a day of national mourning, churches held special services for the 123 men now known to have died when the Alexander Kieland, a rig serving as a hotel for workers, overturned in a North Sea gale Thursday night.

"Everyone knows somebody who was lost on the rig," Stein Vikviksveen, a local journalist, said. "It has been strange to watch the mood in this city totally change. No one smiles, no one laughs -- they are all in shock."

All of the dead identified so far came from Stavanger and nearby coastal towns, where most had spent their lifetimes.

Haugescund, a town of 28,000 that is 90 minutes north of here by boat, was the hardest hit. It lost 30 men.

"They were young men, trying to make good money quickly and build up a family," said Oywind Krovak, chairman of the Ekofisk Committee, the main trade union in the Ekosfisk oil field, where the disaster occurred.

Dr. Per Drablos, a surgeon who has put in long hours since the accidents, said, "Many of the doctors and nurses here knew people on the Kielland. We just waited to see if they would come through the door.

"Many of the survivors refused to talk -- others it was unreal and could not recognize what had happened to them. There was no hysteria but we are worried about their psychological reaction when the experience sinks in over the next few weeks."

"Stavanger is such a small place -- one of the men who died, Torstein Sead, visited me in town on Wednesday," Colin Peck, a local businessman and the honorary British consul, said.

"My wife teaches two of his sons in school and one of them came to class on Friday morning saying his father had been on the Kielland. We did not know he had gone out there until then and we did not believe the boy at first, but he was right. It's horrible but Torstein flew out to the Kielland just in time to die."

The disaster caught the country at a moment when good tidings were in the air.

The Rev. Alex Kons, an American Cahtolic priest who has spent most of his life in Scandinavia, said here, "It was the start of Easter week. People were off to holiday in the mountains, spring was coming and the future seemed rosy. Now this has happened. I came down the coast on Friday from a small northern village and the atmosphere was heavy with grief the length of the country."

"People have turned to drink and I am now confessing those who feel badly for getting drunk to hide their grief," Kons said today.

And though it is a sad a place today, there is no serious doubt of the region's commitment to the black wealth offered by the sea that surrounds it.

"People know that production must go on," Kons said. "They live from oil."

A union official said an unskilled 18-year-old laborer on an oil rig would earn $2,000-a-month and a skilled laborer more than $3,000 compared to a national average salary of about $1,150 a month.

The collapse of Kieland was a rare setback for Stavanger, which has been transformed by oil money from a declining fishing village of 70,000 people 15 years ago to a prosperous town of 90,000 of whom 10,000 are foreigners working in the oil business. Their influx has brought Chinese and Italian restaurants, discos, cowboy boots and Texas drawls -- but local residents say that relations between the communities have been good.

Stavanger is a strikingly pretty town of old clapboard red-tiled houses restored with the help of oil money. Though it is the headquarters of Phillips Petroleum, the company that controlled the Kielland, and the state oil company, Statoil, Stavanger has managed to keep oil depots and equipment well out of town.

As the official Norwegian government committee investigation the accident began work yesterday, Phillips officials refused to speculate on possible repercussions of the disaster. A Norweigian government official said, however, that one possible result will be to prohibit the use of floating rigs like the Kielland as hotels for oil workers.