Norway puts lid on further oil exploration

The Arctic port of Svolvaer in northern Norway, in the region that the country will likely never drill for oil in now.
The Arctic port of Svolvaer in northern Norway, in the region that the country will likely never drill for oil in now. Photo credit: Reuters

Oil exploitation made Norway rich - but now the Scandinavian country has put its foot on the industry's brakes.

The Norwegians are backing away from further oil exploration, amidst growing public discomfort with the industry due to fears around climate change.

In a move similar to New Zealand's Labour-led coalition Government banning future oil and gas exploration, Norway's opposition Labor Party has now pulled its support for oil exploration in the sensitive Lofoten islands in the Arctic Circle.

The head of the Norwegian Oil and Gas Association told Bloomberg that "the whole industry is surprised and disappointed".

"It does not provide the predictability we depend on," Karl Eirik Schjott-Pedersen said.

The move means Norway is prepared to forego an estimated one to three billions of barrels of oil that could lie within the protected region.

And now that there's a solid majority in parliament to keep Lofoten off limits, the Norwegian oil industry fears that politicians could be willing to reign in the sector even further.

The industry is facing declining public support as well as dwindling political friends, and environmental groups are also launching legal challenges.

The environmentalists' battle is likely to now move on to whether drilling should continue in the Barents Sea.

The oil industry also fears that Labor could now compromise on other issues when it is next in power, including petroleum taxes and an exploration refund for companies that aren't profitable.

Norway currently pumps out more than 1.6 million barrels of oil a day, but the country is moving away from polluting companies such as coal, and just last week indicated it would invest more than $20 billion in unlisted renewable energy infrastructure, via its Government Pension Fund Global (GPFG).

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