The Norwegian government today opened the way for oil and gas activity in a new area of the Barents Sea while also launching an offering of fresh exploration blocks in mature areas.
The move accompanied its decision not to carry out in the current parliamentary period a controversial impact assessment of environmentally sensitive areas off the Lofoten Islands, seen as a precursor to opening up for oil drilling.
However, it said it would still gather intelligence about the “effects of petroleum activities” in the region that could provide the basis for a future study beyond the next election in 2013.
The move is being seen as a political compromise by the Labour-led government with its coalition partners, the Socialist Left and Centre parties, which have vigorously opposed such an assessment in the Lofoten, Vesteraalen and Senja areas. The contentious issue potentially could have felled the coalition.
“The government will maintain exploration activity for oil and gas and allow the oil industry access to interesting exploration areas within an environmentally safe framework,” said Prime Minister Jens Stoltenberg.
Presenting the government’s updated management plan for the region, Stoltenberg said an impact assessment would be carried out in the southern Barents Sea – in an area previously disputed with Russia – as a precursor to a future licensing round.
The study would be carried out in the recently delineated area once Russia ratifies the maritime boundary. It would be the first step to opening up the area, where abundant oil and gas reserves have been identified by earlier studies.
The government has also extended boundaries for exploration off Troms and Finnmark counties and will fund a Nkr180 million ($32 million) study of oil resource potential off Jan Mayen island.
In addition, a new licensing round under the so-called Awards in Pre-defined Areas was announced by new Oil & Energy Minister Ola Borten Moe in his first act since taking over the role this week. A total of 62 blocks will be offered in the North Sea and Norwegian Sea, compared with 50 last year.
Despite the government opening up new areas for oil activity, the decision not to proceed with an impact study in the Nordland and Troms areas of Lofoten – which are believed to hold high resource potential – is seen as a disappointment by the industry.
Norwegian industry lobby group OLF said it was “very dissatisfied” with the Lofoten decision.
Statoil chief executive Helge Lund warned that Norway’s oil production, which has fallen by a third in the last decade, would drop “considerably” beyond 2020 unless the industry gains access to new exploration plays.
He said the decision not to go ahead with a Lofoten impact study was a setback for the industry and that the Norwegian state oil company would continue to work for such an assessment.
“However, the fact-finding process now being initiated means that, once a decision to carry out an impact assessment has been taken, less time is needed to open up for exploration activity, also in the case of the acreage off the coast of Nordland and Troms,” he added.
Stoltenberg, whose party has been more favourable to an opening up off Lofoten, has been forced to strike a deal that balances industry demands with the vociferous opposition of green groups and coalition partners to preserve the stability of his government.
Frederic Hauge, leader for environmental group Bellona, said of the Lofoten decision: “This is an important victory that shows it pays to fight – and we will continue to fight.”
