Oil and gas in the capitals: Norway sustains the industry

DR. ØYSTEIN NORENG, CONTRIBUTING EDITOR, NORTH SEA  

Recent parliamentary elections in Norway have strengthened the political position of the country’s offshore oil and gas industry. Before the September vote, there was apprehension that parties opposed to petroleum activities would be able to block new licensing. Among the eight parties in the new Parliament, only two, the Environmentalist Party and the Left Socialist Party, wanted to discontinue oil and gas activities. The two parties total 17 out of 169 representatives.  

A new attitude on oil and gas. The outcome is a Labour minority government forced to manage coalitions to secure legislation and pass the budget. The ensuing budget negotiations have marked reverses for the Environmentalists and the Left Socialists; they conceded to support the budget of a government that does not intend to discontinue oil and gas activities. Emerging winners are first the Labour party, but also the leftist Red party (a more pragmatic competitor to the Left Socialists) and the Centre party as well. To sum up, the election results confirm that a large majority of the population has a positive attitude toward oil and gas activities. This is a reality that any parliament and government will have to consider.  

Reasons are evident. Since the early 1980s, the Norwegian government has invested all oil and gas revenues in a sovereign wealth fund, of which less than 3% annually is transferred to the national budget. Nevertheless, in 2025, about a quarter of the budget was financed by the fund. Moreover, oil and gas constitute Norway’s major economic activity, providing many well-paid jobs, also along the coast.  

With a more secure parliamentary position, the Labour government now has a freer hand to take on petroleum issues. The diminished importance of the Left Socialists should open the door for more licensing and exploration.  

Norway is a mature oil province. Exploration commenced in 1965, and production began in 1961. At first, policy aimed at a fast pace of activity, but the 1973 oil price rise convinced the government and the public that moderation would be preferable. Instead of rushing into a brief oil boom, Norway chose a more gradual development, securing national control and competence, as well as the extension of the value chain upstream to the supply of goods and services, and downstream to the management of revenues. 

After 60 years of petroleum activity, the official estimate is that 56% of the expected recoverable resources on the shelf have been produced, and 22% of the overall resources have yet to be proven. About 60% of the oil in place has been found, lifted and sold, but only about 45% of the natural gas. Thus, Norway’s petroleum future will increasingly be as a producer and exporter of natural gas.  

The Norwegian part of the North Sea still has considerable reserves, but the Norwegian Sea and the Barents Sea also have sizeable proven reserves. Historically, these maritime areas have been the subject of limited exploration, so there is a potential of finding more. Together, the three areas may sustain an oil extraction of maybe 2 MMbpd through 2050. According to the official estimate, about 60% of the resources yet to be proven are in the Barents Sea.  

Prospects for various areas. The North Sea is the center of Norway’s petroleum activities, with an established infrastructure. Maturity means that discoveries are likely to be small, although major finds cannot be excluded. The official estimate is that three-quarters of the oil in place has been lifted; for natural gas the figure is less than two-thirds.  

The Norwegian Sea includes some geologically petroleum-prone areas, but so far, for fisheries reasons, they are closed to oil and gas activity, including exploration. Water depths are important. The official estimate is that about one-half of both oil and gas has been produced.  

The Barents Sea has more modest water depths, but it is far away with little infrastructure in place, in addition to limited geological knowledge about the area. In the Barents Sea, more than one-half of the resources estimated are in areas that have not been opened for petroleum activities. Estimates are uncertain.  

To sum up, in Norway there is a general agreement to continue oil and gas activity with the current framework, i.e. respecting the limitations set by concerns for the fisheries. Attempts at opening new areas for the petroleum industry are likely to meet with opposition, not only from the fishing industry, but also from many citizens and interests concerned. There is a potential for serious conflicts over fish versus oil. With present levels of activity and income, such disputes may be deferred. 

Whereas oil is sold in a transparent world market, Norwegian gas is essentially sold in Europe. The major customers are the EU, especially Germany, and the UK. Both have declared their intention to phase out the use of fossil fuels. 

EU and UK intentions matter to Norway ‘s petroleum policies. A recurrent question is how serious are these aims? In Norway, one argument from the environmentalist/green lobby is that further investment in petroleum activities is a waste of money. Presumably, offshore installations and pipelines will (soon?) appear as industrial ruins.  

Realities give a different message. The EU has, for years, aimed at zero emissions of CO₂, and as targets for 2030 appeared unattainable, they were replaced by much higher targets for 2040. Recognizing that the immediate path set out to 2030 was too steep, the EU, as an alternative, chose an even steeper path to 2040. Realism is questionable.  

The current German government is planning an energy price change for industry from Jan. 1, 2026, emphasizing the supply of secure and affordable energy over climate considerations. The purpose is to stimulate activity in industry. The plan is an industry price for electricity of a maximum of €0.05/KWh, a reduction of 50%. A German industrial price for electricity undermines the EU's energy policy. The issues are important to Norway, with a large German market for energy and tougher competition from German industry.