Norway debates shutting down a crucial source of revenue: oil production

One of the top petroleum producers, Norway owes its generous welfare state to oil production

A photo taken on September 1, 2021 shows Norway's Prime Minister and leader of the conservative Hoyre party, Erna Solberg on an election campaign poster for the parliamentary elections in Oslo. Norwegians go to the polls on September 13, 2021 for the legislative elections.
AFP

A photo taken on September 1, 2021 shows Norway's Prime Minister and leader of the conservative Hoyre party, Erna Solberg on an election campaign poster for the parliamentary elections in Oslo. Norwegians go to the polls on September 13, 2021 for the legislative elections.

Norway will head to the polls this weekend after a tense national election campaign dominated by debates on the country’s contested oil sector. 

Opinion polls show the opposition Labour party is on course to replace the governing Conservative coalition of Erna Solberg, though Labour would need support from two or more other parties to secure a parliamentary majority.

Whoever wins, though, seems to be under pressure to lead the country’s transition from oil, the crucial source of revenue for Norway, Western Europe’s top petroleum producer. 

Norway's two biggest parties, the Conservatives led by Prime Minister Solberg and the Labour Party led by Jonas Gahr Store, have both refused to bid farewell to black gold.

But each camp has small factions pushing for the country to set an example by putting an end to its oil dependence and speeding up its green transition in order to respect its commitments under the 2015 Paris climate accord.

According to a poll on August 20, 35 percent of Norwegians said they were in favour of ending oil exploration.

Moreover, the green party MDG, whose support is critical for the Labour Party to form a parliamentary majority, calls for an immediate end to oil prospecting and a halt to production by 2035.

"Oil belongs in a museum. It served us very well for many decades but we can now see that it is destroying our climate," says Ulrikke Torgersen, the Greens candidate in the southern town of Stavanger, Norway's oil capital where it is often said locals have oil running through their veins.

After the UN report was published last month, warning that global warming was dangerously close to tipping out of control, climate change has become one of the two main issues of debate. 

The climate report, which warned of an acceleration of 'unprecedented' extreme events linked to climate change, propelled the subject right to the heart of the election campaign.

Even the International Energy Agency (IEA) has warned that all fossil fuel exploration projects must cease immediately if the world is to keep global warming under control.

Significant transition

A clean break would be painful for Norway: the oil sector accounts for 14 percent of gross domestic product, as well as 40 percent of its exports and 160,000 direct jobs.

Over the years, oil and gas have financed Norway's generous welfare state, as well as costly environmental initiatives such as incentives for electric car purchases and the protection of rainforests. 

In addition, the cash cow has helped the country of 5.4 million people amass the world's biggest sovereign wealth fund, today worth more than 12 trillion kroner  $1.4 trillion).

As climate change has become a popular worldwide issue,  the oil industry is struggling to attract young talent in Norway despite paying high salaries. 

At the University of Stavanger, the number of Masters students in oil engineering is shrinking like the icecap in summer.

From over 60 students in 2013, most of them Norwegians, their number has dropped to 22 this year, including only a handful of nationals.

"We need to get rid of fossil fuels, no doubt about it. Even we in Norway as an oil-producing country, we know that. But the question is how fast we should do that and how prepared we are for that," Professor Mahmoud Khalifeh said. 

"Even if you want to stop oil production, we need petroleum engineers to design how to properly close thousands of active wells to avoid leakages to the environment," Professor Khalifeh added.

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