Norway Is Going Full Steam Ahead On Its Oil Ventures

Despite announcements last year that it is striving for net-zero carbon emissions by 2050, Norway has now said it will go full steam ahead in its oil ventures over the coming decades.  While neighboring Denmark plans to end all North Sea operations by 2050, Norway, Western Europe’s largest oil producer, continues to offer exploration and production contracts to several companies, as it intends to develop its already well-established oil industry further.

In a white paper, Minister of Petroleum and Energy, Tina Bru, stated that “The main goal of the government’s petroleum policy - to facilitate profitable production in the oil and gas industry in a long term perspective - is firmly in place.”

This week, Norway’s oil majors announced they would be developing four oil and gas discoveries, at a cost of $1.69 billion, to increase output in the country’s existing oil fields.  Equinor (0.47%) and Aker BP hope to tap into Norway’s remaining oil resources while demand is high, as after 50 years of oil production around half of the country’s oil reserves are yet to be pumped. 

The Kristin South project, which includes the Lavrans and Kristin Q discoveries, is awaiting ministry approval and is projected to have an output of 58.2 million barrels of oil equivalent over the field's lifetime. Equinor will operate the Kristin field, commencing production in 2024 and 2025. Petoro, Eni (1.68%), and TotalEnergies (1.26%) all have a stake in the field. 

Earlier this month, Norway awarded four new licenses in the Norwegian Sea and three in the Barents Sea, in frontier Arctic areas, to seven companies. One of the Ministry of Petroleum and Energy’s key concerns is maintaining steady employment in the country, with around 200,000 jobs currently directly and indirectly linked to oil and gas. 

While Norway is leading the way in green energy at the national level, many are criticizing its high level of oil exports, which are anything but carbon friendly. As country leaders talk of a ‘green transition’, it has not been overlooked that Norway still relies heavily on its oil and gas revenues even if looking to make the switch to renewables at home. 

Norway’s ambitious carbon-cutting targets do not consider the emissions from the oil and gas that it sells to other countries, meaning it could still achieve net-zero without curbing its fossil fuel production

Sandrine Dixson-Decleve, co-president of The Club of Rome think tank explains, however, “We look to Norway for leadership and ambition on the energy transition – not complacency and backtracking. Looking the other way will seriously take away from growing global political momentum to shift our energy system from stranded fossil energy assets towards low carbon energy.” 

Yet Norway argues that it produces some of the world’s greenest oil, partially thanks to a system that links offshore platforms to the onshore electricity grid, allowing it to avoid the use of diesel generators.  

In addition, Norway is betting heavily on offshore wind, hydrogen, and electrification to achieve its net-zero Paris Agreement Commitment and balance out oil and gas production.  

But some believe that Norway has a long way to go if it wants to produce truly green oil through carbon capture and hydrogen projects. And if operators cannot access cheap renewable energy, it could force them to close oil fields prematurely as emissions costs increase.  

The question is whether Norway can introduce enough green energy practices to extend the shelf life of its well-established oil industry as well as achieving carbon-cutting goals.