Green Party's political influence increases as it pushes for the phase-out of Norway oil

The idea of closing oil and gas fields in Norway is unsettling. But the Green Party, a small party, is pushing for it as the global shift away from fossil fuels is looming.

After the election on Monday, the Greens' seats more than doubled to seven. The ruling Labour Party needs their support to maintain a two seat majority.

Arild Hermstad, leader of the Green Party, said: "We will prioritise the climate issue."

"We need to make a transition away from fossil fuels and into the renewable energy sector." Norway lacks this today.

The party wants to stop all exploration immediately and phase out petroleum activities by the year 2040. It has even named the first fields that it wants closed - Statfjord Brage Draugen Ula. Eight more fields will be shut down by 2030.

Jonas Gahr Stoere, the newly elected Prime Minister of Norway, said that Norway should continue its exploration for oil and natural gas. This is a sign that negotiations will be difficult.

Norway's oil industry is currently booming with record exports and investments. Workers at the supplier companies, which account for nearly half of the sector's workforce, face increasing risks of being laid off as major projects wind down and new orders are scarce beyond 2028.

Five years ago, when the COVID-19 pandemic was ravaging the world, the government gave more than $10 billion to oil and gas companies in the form of tax breaks and other measures, and also provided modest funding for green energy.

The funding provided by the government has not been able to provide the "bridge" that was hoped for to bring green projects to a level of scale comparable to oil and gas. Most undeveloped discoveries remain small, and they will be unable to replace existing order books or production.

Karl Johnny Hersvik, CEO of oil and gas company Aker BP, said that the tax package was expected to be a gateway into another industry. "Now I am a little concerned... They'll struggle if these yards don't have work.

Aker Solutions, Norway's leading energy services company, cut its revenue forecasts for renewables earlier this year, citing the immaturity of the sector.

The company stated that it is currently very busy in most of its locations but, like many other companies in this sector, depends on future projects to materialize. The company said that it could not rule out future capacity changes.

Worley Rosenberg in Stavanger, which focuses on the oil sector, announced that it would lay off 30 percent of its staff, or around 300 employees, due to declining orders.

Aleksander Eriksen, a union representative, said: "It was shocking." "We do have a new offshore wind contract but it won't be coming anytime soon." In the next year or two, we'll be facing challenges.

Aibel, an energy services firm in Norway that employs 3,900 people, has found alternative employment by building floating converter stations alongside oil and gas platforms for UK and German Wind Farms at its shipyard located in Haugesund, on Norway's West Coast.

OUTPUT FALL-OFF

The scenarios for Norway's oil and gas production all point to a lower level.

According to the Norwegian Offshore Directorate, the base-case scenario shows a drop of 40% in production by 2040 and perhaps even 70%.

Torgeir Stordal, Director General of NOD, said: "We will not be able sustain the current plateau in production for much longer."

This is a concern for a sector which accounts for around 50% of Norway's revenue from exports and 10% of the private sector's jobs.

Aker BP’s 700 million barrels of oil equivalent Yggdrasil gas and oil field, which is due to begin in 2027, will be the last one of this size.

The Wisting oilfield, worth nearly 500 million BOE, was delayed until 2022 because of rising costs. The future is in smaller development.

So far, the Norwegian government's efforts to increase exploration in the Barents Sea have not sparked a surge of interest. The Barents Sea is believed to contain the majority of Norway's undiscovered natural resources.

Out of the 15 companies with licenses to operate on the Norwegian Continental Shelf, only Equinor's Var Energi, Aker BP and Eni are drilling explorations wells.

Hersvik, Aker BP's Hersvik said: "If you want to make big discoveries, look at areas that have not been explored."

The decline in Norwegian oil production will increase Europe's dependency on imports of liquefied gas and oil from the U.S.A. and Middle East.

The European Union's rules to end the production of petrol-powered cars by 2035 will also reduce demand for fossil fuels.

All sectors, including heavy industry, are also facing a mandatory target of reducing emissions by 90 percent by 2040 in comparison to 1990 levels.

SLOW DEVELOPMENT

Slow green energy development is a major factor in the lack of new jobs in the sector.

To date, the government has only awarded 1.5 GW of offshore wind capacity. In May, a long-awaited bid for 1.5-2 GW more floating offshore wind capacity was announced.

In a letter sent to Aker Solutions shareholders in May, billionaire Kjell-Inge Roekke said that there had been "little" progress in the sector.

He added that "Norwegian Offshore Wind, as a meaningful source of energy, is at best at least a decade off."

(source: Reuters)