Norway gives green light to dig out more black gold

You can’t get greener than Norway, and would be hard-pressed to find citizens anywhere else in the world who appreciate the physical beauty of their country more than the Norwegians. 

If you are not out skiing cross-country by the age of three – or continue on your Langrenn skis well into your 80s – then you don’t really count as a countryman. Bragging about the number of “ski days” you have been out during the season over a glass of aquavit is as much a sport as the slalom. 

That’s the winter. In the summer, the large number of those lucky enough to have summer homes – or hyttas as they called – migrate for weeks on end either to the fjords to fish and sail,  or to the fjells to walk and hunt. 

It’s this love of – if not addiction to – spending so much time outdoors that has led Norway to be one of the most ecologically aware nations on earth. With its 5.5 million inhabitants, Norway has the highest proportion of electric cars in the world – with the help of generous government subsidies. Four out of five new cars sold in Norway in 2022 were battery powered, mainly Teslas, followed by VW and Skoda. Visit the new Edvard Munch museum – as I did recently – and the car park is one big electric charging point.

Thanks to the country’s enormous natural resources – water as well as oil – around 96 per cent of all electricity is generated by hydropower which means that the country has one of the world’s smallest carbon footprints. 

Yet Norway – already sitting on untold riches after six decades of oil and gas wealth – has just stunned the world by giving the green light to another 19 oil and gas projects worth more than 200 billion kroner ($18.6 billion).

If striking such huge oil and gas deposits once isn’t enough luck for one nation, the Norwegians have now struck gold again, having just discovered vast concentrations of valuable minerals such as copper, zinc, magnesium, niobium and cobalt under the seabed in the far northern Arctic waters. According to geologists, there are 38 million tonnes of copper on the seabed – about twice what is mined globally every year – and around 45 million tonnes of zinc in polymetallic sulphides buried beneath the seabed on the volcanic Mohns Ridge close to Bear Island on the edges of the Norwegian and Barents Seas. On hearing of the recent discovery, President Putin called in his defence chiefs and other experts to take another look at the much disputed international borders in the Arctic Circle. 

But back to oil. These new 19 projects involve the opening of new fields, the extension of existing oil and gas fields and investments to increase the rate of hydrocarbon recovery in the North Sea and the Norwegian Sea. Most of the development will be carried out by Norway’s Equinor – 67 per cent owned by the state – and Aker BP, in which Britain’s BP is a 16 per cent shareholder, Germany’s Wintershall Dea and Austria’s OMV.

Once the fields are up and running, it means Norway can guarantee new production from the second half of the 2020s in order to be able to maintain Norwegian deliveries at a high level.

What’s all the more fascinating about the decision is that it was made by a Labour government, one which last year committed in its White Paper on Energy “to reduce emissions from oil and gas production on the Norwegian continental shelf by 50 per cent by 2030 and to net zero in 2050.”

Yet at the same time, Labour’s energy minister, Terje Aasland, laid down that the government will continue to develop the “petroleum policy, facilitating a stable and long-term supply of oil and gas from the Norwegian Continental shelf to Europe in a challenging time.”

While Norway’s decision may have stunned the world because it appears to contradict its long-term commitment to sustainable energy, it hasn’t surprised most Norwegians who see nothing hypocritical or indeed incompatible between the two ambitions.

As one Norwegian businessman put it: “What Russia’s war with Ukraine has shown so vividly is that secure supplies of energy are essential for domestic and international security. It’s also an established fact that – even with the ambition of a transition to renewable and clean energy – the world still needs more fossil fuels to provide energy needs for decades to come as we go through the transition towards more sustainable energy sources.”

And the Norwegians aren’t stupid. Whatever their political colour, they are not ashamed of taking advantage of the global demand for more fossil fuels for years to come, a move which will bring in even more revenue to add to the already colossal sovereign wealth fund – worth  $1.4 trillion at the last count. 

Not surprisingly, the decision has outraged climate activists. Two campaigning groups – the Nordic branch of Greenpeace and Natur go Ungdom – are now planning to sue the Norwegian government for violating the country’s human rights commitments and constitution by planning these new oil and gas projects. They lost a similar lawsuit brought against the state and are likely to lose this one too.

Norway knows that it is in a unique – and strategic – position with regard to helping its European neighbours to keep the lights on and the gas heaters running: the country became Europe’s biggest gas supplier last year after Russia cut deliveries and the EU imposed sanctions on gas imports following the war in Ukraine. Indeed, when announcing the new licenses this week, energy minister Aasland acknowledged that dependence, saying that the projects are also an “important contribution to Europe’s energy security.” And the revenue raised will be ploughed back, he said, into providing the foundations for the technology needed to develop wind power, hydrogen, and carbon capture and storage.” Indeed, Equinor is one of the leaders in developing offshore wind as well as pioneering hydrogen.

Britain should be particularly grateful that Norway is keeping the fossil fuel supplies flowing. Gas is still the UK’s biggest energy source, supplying 43 per cent of total UK energy last year with oil the second source providing 32 per cent of total energy used. Of the 76 billion cubic metres (bcm) of gas we consume, some 32bcm were from Norway and 29bcm were from the UK continental shelf. Our reliance on gas and oil increased during the pandemic, supplying 75 per cent of the UK’s total energy in 2021 – about 2 per cent more than in 2020. 

Offshore Energies, a not-for-profit trade association representing all offshore industries, warns that the UK will have to import almost all its gas and most of its oil from overseas suppliers unless billions of pounds are invested in new North Sea exploration and production facilities.

Without that new investment, the OEUK estimates that by 2030 around 80 per cent of UK gas supplies and more than 70 per cent of oil will have to be sourced abroad. Although there are enough oil and gas reserves to support the UK for at least 15 years, there has been too little investment in the platforms, pipelines and other infrastructure needed to access it.

Even with the best will in the world, offshore wind is still too small to be able to replace the declines in oil and gas output from the North Sea. Which is why Sir Keir Starmer’s pledge to ban all future oil and gas exploration should he make it to No 10 is such a madcap proposal, one which makes us all the more reliant on imports from countries like Norway and still unreliable renewables. 

In the words of Gary Smith, head of the GMB union, Labour’s proposal is naive, economically illiterate and lacking in intellectual rigour, one that will make us all poorer and lead to the loss of tens of thousands of jobs. Particularly in Scotland where Labour hopes to win votes. Can’t put it fairer than Smith does.

What’s even more disturbing about Labour’s proposal is that there is plenty more of the black stuff to be found below the North Sea seabed – up to 15 billion barrels of oil and gas are said to be locked up. The UK uses 1 billion barrels of oil a year. Enough to keep the lights on for a few more years. 

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