In case of any doubt about Norway’s commitment to maintain – and expand – its production of gas and oil offshore, the energy minister, Terje Aasland, has a pithy response: “We will develop, not dismantle, activity on our continental shelf.”
This week, to the alarm of environmental campaigners, he announced that three gasfields off the country’s southern coast would reopen by the end of 2028 – nearly three decades after they closed – to meet a shortfall caused by the impact of the war in Ukraine and disruption to supplies from the Middle East.
The decision will help keep gas and oil production at about the 2025 level – which has been stable for almost 20 years – and stay broadly the same for the rest of this decade. Norway has 97 offshore oilfields, three of which came on stream last year, and its Norwegian Offshore Directorate expects “100 and beyond” within the next two years, still producing at least the present level of 2m barrels of oil daily.
The Barents Sea, in the high north, is the new gas and oil frontier – with the prospect of mining for seabed minerals between northern Norway and Greenland, a more distant prospect after initial surveys by the Norwegian Offshore Directorate – an agency of Aasland’s department – showed potential.
“Norwegian offshore production plays an important role in ensuring energy security in Europe,” says Aasland. “The world, and Europe, will have a need for oil and gas for decades to come and it is crucial that Norway continues to develop its continental shelf to remain a reliable and long-term supplier … and (with) a high level of exploration activity.”
The sector generates vast wealth for Norway, but the decision this week to reopen the Albuskjell, Vest Ekofisk and Tommeliten Gamma gasfields in the North Sea, which were closed in 1998, has received heavy criticism in some quarters.
It goes against the advice of the country’s environment agency, and the Socialist Left party accused the government of “greenwashing”.
Lars Haltbrekken, the deputy leader and environment spokesperson for the party, says: “It shows that the government is once again blatantly ignoring environmental advice from its own experts. All the talk about responsible oil extraction is nothing but nonsense. It’s greenwashing through and through, with vulnerable and important natural areas being put at risk with full awareness.”
The Norwegian energy company Equinor (formerly Statoil), in which the state owns 67%, says it is making a “big effort” to maintain its own 2020 production levels of 1.2m barrels daily up to 2035. The Norwegian’s state holding should yield about £2bn in dividends this year.
“It’s very important for the market value of the company to keep production higher now than in 2001 – yes, we had a lower production then than now,” says Equinor’s Ola Morten Aanestad. To arrest any decline, he says Equinor is committed to investing $6bn (£4.4bn) annually up to 2035 – “more drilling … a lot of new development, more pipelines … maybe smaller fields developing, but still important.”
Aasland – Norway’s longest-serving oil minister, a 61-year-old former electrician and trade union leader – says Norway has “a responsibility”.
“In Europe, before the war in Ukraine, there was much talk of how to get rid of oil and gas on our continental shelf … now they ask me every day ‘can you deliver more oil and gas’? We are talking about energy security for Europe and we have to increase investment. We have a responsibility. Our focus is very clear.”
Aasland also stresses the importance of job security for the 210,000 people employed by the energy industry in Norway. “It is really important that they wake up in the morning knowing they have a safe job for the future.”
Aanestad says Norway’s consistent tax rate on oil and gas firms has made it attractive to investors.
“We’ve had a 78% taxation level since the 1970s – a high tax, I know – but investors know what to expect; it’s predictable,” he says. That tax is a mainstay of Norway’s £1.5tn sovereign wealth fund, which helps it run a sizeable surplus.
Norway’s unashamed approach is at odds with the UK, it’s North Sea neighbour, where the government has ruled out new oil and gas exploration licences.
Terje Sørenes, the chief economist at the Norwegian Offshore Directorate, says the aim is to prolong production as long as possible, and increase output, that currently provides gas for a third of Europe’s consumption. For now, Europe’s energy superpower is prioritising ever more drilling and offshore production well into the 2030s and beyond.
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