Bloomberg News

Norway’s Labor Party Moves to Open Lofoten to Oil Exploration

January 31, 2013

Norway’s ruling Labor Party took a first step to open environmentally sensitive waters off the Lofoten islands to oil and gas exploration, exposing a rift in the government coalition eight months before general elections.

A committee drawing up Labor’s program for the September elections is in favor of allowing a so-called impact study of petroleum activity in the restricted areas in the next legislative period from 2013 to 2017, group leader Helga Pedersen said today. Such an assessment is a formal step needed to open an area for full-scale exploration and production.

“We’re very happy about this,” Gro Braekken, leader of industry lobby group Norwegian Oil and Gas, said in a phone interview. “A small minority of government parties have hindered an impact study. I hope this doesn’t happen again.”

The government is divided on opening the restricted blocks in the Norwegian Sea. The smaller partners, the Center Party and the Socialist Left, in 2011 were able to postpone a decision on an impact study until after this year’s election even as state- controlled Statoil ASA (STL), which operates about 80 percent of Norway’s oil and gas production, and other companies have lobbied to open the area. It may hold as much as 3.4 billion barrels of oil equivalent, according to industry group KonKraft.

Socialist ‘No’

Opening up the areas to the oil industry “is one possible outcome of an impact study, but it’s not automatic,” Pedersen said by phone. The party, whose biggest backer is LO, Norway’s biggest union and a supporter of opening Lofoten, will formally adopt its electoral program in April.

Yesterday’s move was rebuked by the Socialist Left, which said it wouldn’t back down in its fight to protect the areas off Lofoten and Vesteraalen islands. The surrounding waters are home to unique cold-water coral reefs, provide breeding grounds for wildlife ranging from fish to whales and is a place where some of Europe’s largest seabird colonies gather.

“No one should doubt how serious we are about this,” party leader Audun Lysbakken said in a phone interview. “For the sake of nature, climate and future business, our crystal- clear answer in the debate about drilling for oil is ‘no.’”

The Center Party’s Petroleum Minister Ola Borten Moe has said that while oil activity off Lofoten was “fully defendable” from an environmental point of view, he favored upholding restrictions until after 2017 to protect fisheries. His party remains divided on the issue.

Falling Production

The governing coalition is trailing in opinion polls before the election. The opposition Conservative Party and Progress Party both back opening up the areas as soon as possible.

Statoil and the Norwegian Oil and Gas lobby have said opening up these areas is necessary in order to compensate for falling production in Norway. Oil output has been more than halved since it peaked in 2000, according to figures from the Norwegian Petroleum Directorate.

“This is a very exciting area for the industry,” said Braekken. “It’s important and urgent to get new areas in order to keep oil companies on the Norwegian shelf and continue to develop it.”

To contact the reporter on this story: Mikael Holter in Oslo at mholter2@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman in Oslo on at jbergman@bloomberg.ne


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