Norway's election results this week are expected to uphold existing oil and gas policies aimed at maximizing economic gains from the sector, meeting European energy supply and making the country a pioneer in the energy transition.
Еще не зарегистрированы?
Получайте ежедневные электронные уведомления и заметки для подписчиков и персонализируйте свои материалы.Зарегистрироваться сейчас
Victory by the Labor Party at parliamentary polls confirms Norway's broad intention to make the most of its oil and gas resources despite environmental and legal challenges mounting against the sector across Europe.
With Conservative Prime Minister Erna Solberg conceding defeat, the stage is set for a switch back to a center-left administration led by the Labor Party, which headed the previous government to Solberg's, up to 2013.
Tax changes designed to answer criticism that the regime is too supportive of oil and gas exploration, proposed by the authorities ahead of the election, appear likely to gain parliamentary approval without provoking industry ire.
The Green Party looks likely to have advanced on the one seat it held previously and could yet play a role in a coalition government, but its goal of abolishing the oil and gas sector in Norway by 2035 looks far-fetched.
While support for the Greens and environmental discussion have risen up the agenda, "Labor are more or less a guarantee for no dramatic change," Teodor Sveen-Nilsen, research analyst at Spare Bank 1 Markets, told S&P Global Platts.
S&P Global Platts Analytics senior analyst Sami Yahya said the results "provide the Labor Party with a wider array of options of how to form the next government," with potential partners the Center and Socialist Left parties both supporting exploration and extraction, albeit the latter wants a more aggressive approach on climate change.
Norway is by far Western Europe's largest oil and gas producer, with oil output this year expected to exceed 2 million b/d, falling to around 1.2 million b/d in 2030, according to S&P Global Platts Analytics.
Oil output levels have received a major boost from the newly developed Johan Sverdrup Field and are roughly double production rates from the UK, with Norwegian crudes now a mainstay of Platts' Dated Brent benchmark, used globally by the industry.
As a major European gas supplier, Norway's reputation for reining in emissions and trialing low-carbon technologies has helped limit criticism from governments in the region that depend on the country's gas despite their climate goals, and are concerned about rising prices and reliance on Russia.
Norway is able to meet about a quarter of gas demand in the EU-plus-UK, and accounted for 57% of UK imports in 2019.
"We're definitely preparing for a future with far less demand for fossil fuel... but we also see that at least in the short- and medium-term we have no reason to believe there will not be sufficient demand for Norwegian gas," Tony Christian Tiller, deputy energy minister in the outgoing government, told Platts earlier. "It's certainly a transition fuel that many European countries will rely on."
At home, the sector provides around 6% of Norwegian employment, and the country of 5.3 million people boasts a $1.4 trillion sovereign wealth fund derived from oil and gas.
Even minor changes to oil and gas licensing, for example in the Barents Sea, look unlikely to get approved in the upcoming four-year term, contrasting with a review of licensing underway in the UK, although incremental modifications to licensing could take place over time, Sveen-Nilsen said. Historically, the make-up of Norway's parliament has had little impact on petroleum policy, thanks partly to a "strong and highly competent bureaucracy in the oil and energy department," he added.
The industry also benefits from a reputation for being one of the world's least carbon-intensive producers of oil and gas, with emissions from the giant Johan Sverdrup Field less than a hundredth of some fields around the world, according to state-controlled Equinor.
Norway is seen as a testing ground for low-carbon technologies such as its Northern Lights carbon capture and storage project, in which Shell and France's TotalEnergies are partners.
And Equinor has emphasized its role bringing new technologies to other parts of Europe, including floating offshore wind, and carbon capture and storage in the UK, and hydrogen production from renewables in the Netherlands.
Al Cook, head of Equinor's international upstream business, sees the company playing a role in curbing emissions at oil and gas production sites around the world through overseas collaborations, he told an industry event earlier in the month.
The main uncertainty around the election is over tax proposals introduced by the outgoing administration that would remove direct rebates for exploration spending, while modifying the system of rebates for capital spending by the industry.
The plans have met little objection and are seen as supporting industry cashflows, though they may deter 'pure-play' exploration companies and generally raise questions about Norway's reputation for tax stability, Sveen-Nilsen said. "We do not rule out that the [tax] change will marginally increase the risk associated with the Norwegian continental shelf," he said.