‘We are talking about energy security for Europe’: Norway doubles down on oil and gas production | Norway
IIf there was any doubt about Norway’s commitment to maintaining and expanding offshore gas and oil production, Energy Minister Terje Aasland has a succinct answer: “We will enhance activity on our continental shelf, not eliminate it.”
This week, alarming environmental campaigners, it announced that three gas fields on the country’s south coast would reopen by the end of 2028 – almost all three Decades later, they closed to cover a deficit caused by the impact of the war in Ukraine and the disruption of supplies from the Middle East.
The decision will help keep gas and oil production at the 2025 level that has been stable for nearly 20 years and remain broadly flat for the rest of this decade. Norway has 97 offshore oil fields, three of which became operational last year, and the Norwegian Offshore Directorate expects “100 and more” in the next two years, still producing oil at current levels of at least 2 million barrels per day.
The Barents Sea in the high north is the new gas and oil frontier; There is the possibility of mining seabed minerals between northern Norway and Greenland; This is a more remote possibility after initial research 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 need oil and gas for decades to come, and it is crucial that Norway continues to develop its continental shelf and maintain a high level of exploration activity to remain a reliable, long-term supplier.”
The sector creates great wealth for Norway, but the decision this week to reopen the Albuskjell, Vest Ekofisk and Tommeliten Gamma gas fields in the North Sea, which were closed in 1998, has come under heavy criticism in some quarters.
This is against the recommendations of the country’s environmental agency, and the Socialist Left party accused the government of “greenwashing”.
Lars Haltbrekken, the party’s deputy leader and environment spokesman, said: “This shows that the government has once again recklessly ignored the environmental advice of its own experts. All the talk about responsible oil extraction is nothing but nonsense. This is greenwash from start to finish, with sensitive and important natural areas being put at risk with full awareness.”
Norwegian energy company Equinor (formerly Statoil), in which the state owns a 67 percent stake, says it is making “huge efforts” to maintain its 2020 production level of 1.2 million barrels per day until 2035. Norway’s state conglomerate is expected to return around £2bn in dividends this year.
“It is very important for the market value of the company to keep production higher than in 2001 – yes, we had lower production then than now,” says Ola Morten Aanestad of Equinor. To stem any decline, he says Equinor is committed to investing $6bn (£4.4bn) a year by 2035: “more drilling… lots of new developments, more pipelines… maybe smaller areas developing but still important.”
Aasland, Norway’s longest-serving oil minister, a 61-year-old former electrician and union leader, says Norway has “a responsibility”.
“In Europe, before the war in Ukraine, there was a lot of talk about 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 need to increase investment. We have a responsibility. Our focus is very clear.”
Aasland also emphasizes the importance of job security for the 210,000 people employed in the energy sector in Norway. “It’s really important that they wake up in the morning knowing they have a secure job for the future.”
Aanestad says Norway’s consistent tax rate on oil and gas companies makes 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. The tax is the mainstay of Norway’s £1.5 trillion sovereign wealth fund, which helps the fund run large surpluses.
Norway’s shameless approach contrasts with its North Sea neighbour, the UK, where the government has rejected new oil and gas exploration licences.
Terje Sørenes, chief economist at the Norwegian Offshore Directorate, says the aim is to extend production for as long as possible and increase production, which currently provides gas for a third of Europe’s consumption. For now, Europe’s energy superpower is prioritizing more drilling and offshore production in the 2030s and beyond.
