In just a few years, Norway's role as a secure and reliable energy supplier with low emissions has gone from being important to being crucial for European security and competitiveness. The fall in activity may begin even earlier, and go faster than many people think. It is now crucial that action is taken to slow down the fall in Norwegian oil and gas production. This is the main conclusion of the new KonKraft report "Outlook: The Norwegian shelf towards 2050".
Watch the video of the report presentation here.
Under current policy, Norwegian oil and gas production, with associated value creation and jobs, will be reduced by just over 60 per cent by 2050.
"The petroleum industry is the engine of the Norwegian economy, with enormous importance for value creation and jobs in Norway. In order to maintain activity, and avoid a too rapid decline in oil and gas production, the industry must be ensured good framework conditions and the allocation of attractive acreage for exploration. Now we must think aggressively and take wise measures, not least to preserve and further develop the supplier industry. Without new discoveries, production will fall faster than necessary, which is unfortunate both for Norway and for Europe, which needs all the oil and gas we produce," says Ole Erik Almlid, CEO of NHO.
"For the LO, it is important to secure Norwegian jobs and Norwegian industry. We will develop our supplier industry, then we are dependent on continued activity on the Norwegian shelf," says LO leader Kine Asper Vistnes, adding:
"Europe is dependent on our energy, and we are dependent on the industry in Europe doing well. It is in Norway's interest that Europe has access to Norwegian gas, if not, they will lose their industry and we will lose our customers," says the LO leader.
Access to attractive and appropriate exploration acreage is crucial
In the report, KonKraft recommends that Norway must facilitate a level of activity that is in line with the Norwegian Shelf Directorate's high path of opportunity, so that the decline in production is slowed down and Norway can maintain its role as Europe's most stable supplier of low-emission oil and gas.
To achieve this, KonKraft believes that Awards in Predefined Areas (APA) should be continued and expanded to include all available acreage that is currently open for petroleum activities and make available previously opened areas, especially the western parts of Nordland VI.
"Both Norway and Europe must turn their attention to the north. It is in the Arctic that energy security and opportunities lie. It is in Norwegian industry that the knowledge and experience to develop new areas in a safe and secure way," says Frode Alfheim, head of Styrke.
KonKraft has decided not to request an impact assessment of Lofoten, Vesterålen and Senja (LoVeSe) in connection with this petroleum report. We note that the Labour Party, the Centre Party and others do not want such an impact assessment. At the same time, we are concerned that other attractive acreage should be made available to maintain Norwegian energy supplies.
"Finding more gas is necessary. Therefore, we believe it is important to gain access to the already open areas in the western part of Nordland VI. The already opened areas in the western part of Nordland VI are the fastest track to get more gas to Europe. Increased production and lifetime of the fields in the Norwegian Sea also create security for jobs and growth in the region," says Hildegunn T. Blindheim, CEO of Offshore Norway.
"We need the value creation and jobs that the oil and gas industry creates. In order to secure expertise, jobs and the basis for new industries, the Norwegian supplier industry must be further developed. Europe will need Norwegian oil and gas for many years to come, and in order to maintain production and activity, new developments are needed. Therefore, more exploration must be done and access to new areas must be opened," says Christian Justnes, leader of the Norwegian Federation of Trade Unions.
A competitive NCS
Going forward, the shelf will be characterised to a greater extent by maximising the value of existing fields and developing smaller discoveries close to existing infrastructure. Stability around the petroleum tax regime is a prerequisite for willingness to invest on the Norwegian Continental Shelf. At the same time, the framework conditions must be adapted to a more mature shelf, where profitable resources are increasingly smaller, more time-critical and dependent on efficient use of existing infrastructure.
The petroleum sector should not have a higher overall CO2 price than other sectors, and the CO2 tax should be reduced in line with higher allowance prices. Expensive, inappropriate requirements and regulations must be removed.
"The Norwegian shelf competes for capital, expertise and investments in an international market. If Norway is to succeed, we must have predictable and competitive framework conditions. For the industry that supplies the Norwegian shelf, we are facing major changes, especially for the shipyards that have delivered large and complex newbuildings as part of the activity package. Now the order book is depleting rapidly, which means that the industry quickly needs more legs to stand on, and at the same time it is crucial that we keep up the pace when it comes to searching for new resources that can be developed to ensure European energy security. For the industry, predictable framework conditions that ensure activity along the entire coast are crucial to secure jobs and retain expertise in the industry," says Harald Solberg, CEO of the Federation of Norwegian Industries.
Europe has a greater need for imports than Norway can supply
The report shows that even in scenarios where the EU and the UK achieve their climate targets, the need for imported oil and gas will be significantly higher than the production Norway is expected to be able to deliver up to 2050. At the same time, Norwegian oil and gas have among the lowest emissions in the world, and Norwegian gas is mainly exported through pipelines directly to Europe.
"The war in Ukraine and the closure of the Strait of Hormuz as a result of the war in the Middle East have affected the entire world economy. The International Energy Agency (IEA) has described the halt in the supply of oil and gas as the greatest threat to global energy security ever. Going forward, we must be able to have several thoughts in our heads at the same time, we must continue to supply the energy Europe demands, while at the same time managing to develop new industries at sea," says Knut Arild Hareide, CEO of the Norwegian Shipowners' Association.
He adds that stable activity and predictability on the Norwegian shelf are crucial for maintaining expertise, jobs and adaptability in the Norwegian supplier industry. A strong domestic market forms a necessary foundation for technology development in new industries such as offshore wind.
About the report
The report "Outlook: The Norwegian Shelf towards 2050" has been prepared by KonKraft, the collaborative arena between Offshore Norway, the Federation of Norwegian Industries, the Norwegian Shipowners' Association, the Confederation of Norwegian Enterprise (NHO) and the Norwegian Confederation of Trade Unions (LO) with the Norwegian Federation of Trade Unions and Styrke. The report analyses developments on the Norwegian shelf towards 2050 and provides recommendations for how Norway can maintain competitiveness, energy deliveries and value creation in a time characterised by geopolitical turmoil and energy transition.
