The demise of the North Sea doesn’t necessarily mean the end of Norway’s petroleum era—far from it. Still, despite significant reserves in the Barents Sea, Norway is about to embark upon a long period of structural decline as its benchmark fields inch closer to depletion and its reserves taper before our very eyes.
The average Norwegian might not even perceive the difference between an oil-rich Norway and one that is past its prime. The nation’s massive external and fiscal net position, as well as its complete energy independence thanks to hydropower, allows for great flexibility regarding future policies. Yet its oil workers must prepare for a future that is much more Arctic, smaller-scale and gas-based.
There’s ample evidence to conclude that all the sweet spots of Norway’s continental shelf have been found. The latest shelf licensing round (24) elicited a weak response, with only 11 companies applying for production licenses. There was plenty to bid for—102 blocks were up for grabs (never before did the Norwegian Petroleum Directorate offer so much, with an overwhelming majority of them in the Barents Sea), but due to their remoteness from formations deemed to be the most hydrocarbon-rich, bidders were only half as numerous as they were during the previous licensing round in 2015.
Other factors also contributed, including ongoing legal disputes whether drilling in the Arctic breaches Point 112 of Norway’s constitution (“natural resources should be managed based on long-term considerations, safeguarded for future generations”) and questions over the admissibility of drilling in Russia-disputed Svalbard waters (10 blocks) might have scared away an investor or two.
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