Oil companies in Norway may pay some of the highest taxes and wages in the world but they could always count on support in the halls of power.<\/p>\n
Then last week the country\u2019s biggest political party pulled out the rug from under that certainty in a dramatic policy shift to abandon support for drilling off the Lofoten islands.<\/p>\n
As calls for action against climate change get stronger, concern is mounting within Norway\u2019s biggest industry that the move could open the floodgates and put the country\u2019s oil licensing policies and generous exploration tax incentives at risk ahead of the next election in 2021. Norway, led by Equinor ASA, has been producing oil for almost half a century, but is estimated to have about half its remaining oil and gas still in the ground.<\/p>\n
Labor\u2019s shift might not seem like a big deal: the party isn\u2019t currently in government and Lofoten has been off limits for years anyway. Yet it matters because Labor has been a faithful ally of the oil industry for decades, and because it raises the possibility that it will cede more ground on oil policy in coalition talks with other parties.<\/p>\n
\u201cThis is the first example of climate-policy considerations having a meaningful impact on the oil policy of one of the leading political parties in Norway,\u201d said Klaus Mohn, an economics professor at the University of Stavanger, Norway\u2019s oil capital. \u201cIt\u2019s a sort of crossroads.\u201d<\/p>\n \nNorway’s oil and gas output risks a steep drop after 2025 without new finds<\/p>\n<\/div>\n<\/div>\n<\/figure>\n Stable and predictable terms have been one of Norway\u2019s main selling points in attracting oil companies. Changes could deepen an expected decline in activity and production in the next decade and bring the Nordic country closer to the end of the oil era that made it so wealthy.<\/p>\n \u201cThe stability of the political support to Norway\u2019s oil industry is weakened,\u201d said Jarand Rystad, who heads the country\u2019s top oil consulting firm,\u00a0Rystad Energy AS. \u201cAll of a sudden, you get a real fear of lower activity.\u201d<\/p>\n The firm no longer ranks Norway as the most stable political regime on its internal list of energy-producing countries, Rystad said (see\u00a0separate story).<\/p>\n Labor\u2019s break frames a broader shift in western Europe\u2019s biggest petroleum-producing nation, where a debate over the oil industry\u2019s future is gaining pace.<\/p>\n So far, drilling opponents have failed to win\u00a0legal challenges\u00a0against the country\u2019s oil regulations or to make decisive electoral breakthroughs. The governing Conservative and Progress parties remain staunch supporters of the industry, and Labor vows to back current terms.<\/p>\n Yet Labor\u2019s own youth wing, which scored a big win with Lofoten, wants to shut the oil industry altogether by 2035. It wants to stop license awards and scrap a rule that lets unprofitable companies claim the tax value (78 percent) of exploration expenses in cash rather than in future deductions — an incentive that\u2019s attracted more companies and led to important discoveries. Two of Labor\u2019s potential government partners or backers in parliament, the Socialist Left and Green parties, have similar demands and look set for electoral gains.<\/p>\n The prospect of a compromise spooks oil executives.<\/p>\n Labor\u2019s Lofoten shift is \u201ca frightening development,\u201d said Stale Kyllingstad, chief executive officer of\u00a0IKM Gruppen AS, one of the domestic industry\u2019s biggest suppliers.<\/p>\n Kjell-Borge Freiberg, Norway\u2019s Petroleum and Energy Minister, called Labor\u2019s decision a \u201cbetrayal\u201d of the close to 200,000 people working in the oil industry. \u201cThere is a fear for what they might give up next,\u201d Freiberg, a member of the Progress Party, said in a phone interview.<\/p>\n The uncertainty alone will deter companies considering a Norway entry, at a time when the biggest international oil companies are already turning away from Norway, according to Rystad. Norway already lacks big projects and depends on new discoveries to limit the decline in production expected from the mid-2020s.<\/p>\n The bosses of Norway\u2019s oil lobby and biggest industry union reacted with disappointment over the weekend. Yet they said in later interviews they trusted Labor would stand firm on the rest of its oil policy to protect investments and state revenues.<\/p>\n \u201cAnyone who sits down to form a government needs an economic platform,\u201d said Frode Alfheim, the head of the Industry Energy union. \u201cLike it or not, we will remain incredibly dependent on the jobs and the revenue from this industry.\u201d<\/p>\n <\/p>\n https:\/\/www.bloomberg.com\/news\/articles\/2019-04-12\/fear-grips-norway-s-oil-industry-as-political-risk-explodes<\/p>\n","protected":false},"excerpt":{"rendered":" Oil companies in Norway may pay some of the highest taxes and wages in the world but they could always count on support in the halls of power. Then last week the…<\/p>\n","protected":false},"author":1,"featured_media":3092,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[46,48,57,90,96,107,113,137,139,160,174,183,184,201,202,209,230,232,233,244,246,249,256,267,277,279,288],"class_list":["post-3084","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-aramco","tag-athens","tag-baroudi","tag-democracy","tag-doha","tag-embargo","tag-energy-peace","tag-gas","tag-gazprom","tag-international-maritime-disputes","tag-lebanon","tag-maritime-boundaries-east-mediterranean","tag-maritime-disputes","tag-offshore","tag-oil","tag-opec","tag-poverty-alleviation","tag-putin","tag-qatar","tag-rosneft","tag-roudi","tag-russia","tag-saudi","tag-straddling-hydrocarbons-reserves","tag-total","tag-trump","tag-usa"],"_links":{"self":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/3084","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3084"}],"version-history":[{"count":0,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/3084\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/media\/3092"}],"wp:attachment":[{"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3084"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3084"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3084"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Projects Wanted<\/h3>\n