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Norway’s energy minister, Terje Aasland, has firmly asserted that Norway will maintain its commitment to the North Sea oil and gas sector, unlike the UK under recent Labour policies aimed at achieving net zero emissions by 2050.
Aasland emphasized to The Telegraph that Norway’s perspective on the oil and gas industry differs significantly from that of the UK, stating that this sector is vital for job creation and economic wealth.
He remarked, “Our intention is to develop the North Sea for the long-term, as the oil and gas, alongside the service industries, are essential. They provide jobs and generate considerable value for Norwegian society.”
In contrast, UK Energy Secretary Ed Miliband has put a stop to new oil and gas drilling in the North Sea, seeing it as essential for steering Britain toward its net zero goals.
Aasland, an electrician by trade, cautioned that the transition to renewable energy sources would not be swift. He expects that Norway will continue to supply fossil fuels to the UK for many years ahead.
UK’s Energy Dependence
Norway’s substantial investments in oil and gas have led to the formation of the world’s largest sovereign wealth fund, currently valued at approximately £1.3 trillion—equating to around £235,000 for each citizen.
As one of the leading investors in the North Sea, Norway holds over 7 billion barrels of proven oil reserves. The country also has significant real estate investments in the UK, notably in London’s bustling West End, covering areas like Covent Garden, Regent Street, and Soho.
Aasland’s comments emerge amidst growing scrutiny of the UK Labour party’s green policies, particularly in light of recent power outages in Spain, Portugal, and parts of France, which were linked to a decline in solar energy generation.
Spain’s national grid operator, Red Eléctrica, indicated that the recent blackouts stemmed from this drop in solar generation. The country has significantly increased its renewable energy capacity, transitioning from fossil fuels like coal and gas.
Critics, including leader of Spain’s opposition, Alberto Núñez Feijóo, have accused Prime Minister Pedro Sánchez of prioritizing green policies over energy security.
Internal Conflicts in Labour
In the UK, internal strife within the Labour party regarding its environmental strategies is becoming more apparent. Recently, former Prime Minister Tony Blair expressed concerns that the government’s current net zero initiatives could be “doomed to fail.”
Even though Blair showed tentative support for the Labour’s goals, Downing Street has not confirmed that Miliband will retain his position until the next election.
In addition to halting new North Sea licenses, Labour’s leadership has enhanced the windfall tax on oil and gas companies, imposing a hefty 78 percent tax on their profits.
Aasland pointed out that such restrictive policies could lead to investments flowing away from Norway. He stated, “To truly support industry for the long term, predictability and a stable framework are essential, along with collaboration between the industry and government.”
“During the pandemic, we recognized the oil and gas supply chains were running low on contracts, leading us to create a tax package to stimulate further development, which resulted in broad approvals for various initiatives.”
Aasland noted that Norway’s oil and gas production is currently in a peak phase, with 124 billion cubic meters of gas exported to the European market last year.
Future of UK Energy Supply
As British oil output diminishes due to the windfall tax and the halt on new licenses, Norway has taken over as the UK’s primary gas supplier. In the year leading up to September 2024, the UK imported 29 billion cubic meters of gas from Norway, utilizing subsea pipelines at a cost of £10 billion, along with a further £10 billion on Norwegian oil—averaging £714 per household.
Aasland anticipated that the reliance on Norwegian resources would persist as the UK’s net zero policies continue to impact its North Sea energy sector.
He stated, “Norway accounts for 30 percent of the European gas market, and as more nations embrace renewable energy, we too will invest in these initiatives. Yet, gas remains crucial for maintaining electrical stability.”
“I believe that pipeline gas from Norway will be among the last sources that the UK will cease utilizing.”
Source
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