Big oil headed for defeat in long Lofoten battle, minister says

Backing down on drilling off Norway’s Lofoten islands could also threaten the search for 16 billion barrels of oil and gas that lies beneath the Barents Sea, the country’s energy minister said.

The waters around the sensitive Lofoten islands will probably never be opened to oil exploration, according to Norway’s climate and environment minister.

The warning comes amid increasing signs that Labor, the nation’s biggest party and a long-time friend to the oil industry, is starting to give in to a push to shield the sensitive islands from exploration.

Oil companies such as Equinor ASA have said access to the area, thought to hold about 1.3 billion barrels of oil and gas, is vital to prolonging Norway’s oil age.

Oil activity off the pristine archipelago in the Arctic circle has been a thorny political issue in Norway for years. Smaller parties, such as the Liberal Party of Climate Minister Ola Elvestuen have forced successive governments to maintain a ban on drilling in return for support.

“If the environmentalists win this one, the focus will quickly move to the Barents Sea,” Petroleum and Energy Minister Terje Soviknes, who represents the Progress Party in the Conservative-led government, said in an interview Friday.

Drilling off Lofoten has been one of the most deadlocked issues for years as political bargaining maintained a ban on exploration. “I don’t think there will be any exploration outside of there,” Elvestuen said in a meeting with reporters in his office in Oslo on Wednesday.

Should Labor flip on the issue, there will be a solid majority in parliament for closing off Lofoten permanently. Compromising with smaller parties, successive governments have kept the area off limits while expanding exploration in the Barents Sea.

Success in the under-explored Barents is seen as key to limiting a forecast drop in production from the middle of the next decade. The Liberals joined the government this year and will likely be followed by the Christian Democrats in the coming months.

Yet the recent search for resources there has been disappointing. That adds to the importance of keeping the door open to Lofoten, Soviknes said. Norway’s supplier industry depends on new exploration and developments to keep thriving, he said.

The growing doubts about which way Labor will go is now hurting Norway’s attractiveness as an oil province, Soviknes said. “They’re slipping in the Lofoten issue, and it’s being perceived as if they’re sliding in their entire oil policy,” he said.

“That rocks what’s perhaps been the most important competitive advantage for the Norwegian oil industry: that we’ve had stable framework conditions regardless of political changes.”

The industry just weathered a deep crisis in 2014 to 2017 because of a crash in oil prices and the Lofoten issue could be next big challenge, Soviknes said.

Norwegian media have reported that a majority of local Labor groups in the Lofoten area now oppose an impact study, which is the first step needed to start exploration.

Oil companies such as state-backed giant Equinor ASA have been pushing to open up Lofoten, Vesteralen and Senja to drilling to make up for a dwindling list of development projects elsewhere in Norway.

The issue could come up at Labor’s congress next year, where the matter could come to a head. But Labor’s top echelon, which has close ties to the powerful oil worker unions, rejected the minister’s criticism.

The party remains firmly in favor of exploring the Barents Sea, said Espen Barth Eide, the party’s spokesman on energy policy. To contact the editors responsible for this story: James Herron at [email protected] Jonas Bergman.

Talk about Lofoten has little impact as long as the biggest parties Labor and Progress included have to keep smaller parties happy by keeping the islands off limits, he said.

“We’ve in no way turned on the need to explore for more oil,” Barth Eide said. Nevertheless, he did acknowledge that at some point Norway needs to be less reliant and cut its exposure to oil.

“There’s a renewable revolution going on in the world,” he said. Greenpeace, one of the most vocal opponents of exploration in the Lofoten area, said it’s getting increasing support from the public for its view, and that it wants nothing more than to move to the next fight.

“Oil games around the unsettled Lofoten issue have kept a lot of other important environmental debates pending,” Truls Gulowsen, head of the group in Norway, said in an email.

“I look forward to focus fully on reducing emissions and protecting other areas as soon as Lofoten is permanently protected.” To contact the reporter on this story: Mikael Holter in Oslo at [email protected]

Framework conditions for oil companies will be part of negotiations with the Christian Democrats as they were when the Liberals joined, Elvestuen said, declining to provide any more details on the upcoming talks or on his thoughts on the likely outcome.

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