Norway makes 53 offers in mature area oil and gas licensing round

Norway's petroleum and energy ministry on Jan. 18 offered 53 production licenses in mature oil and gas producing areas, supporting the country's continued role as Western Europe's largest hydrocarbon producer.

In a statement, the ministry noted the licenses are mainly in the North Sea, but also further north in the Norwegian and Barents Seas. "The petroleum industry contributes with large revenues, value creation and jobs across the country... Further exploration activity and new discoveries are crucial to develop the Norwegian petroleum industry further," petroleum and energy minister Marte Mjos Persen said.

Industry group Norwegian Oil & Gas voiced satisfaction at the offers, made under the 'Awards in Pre-Defined Areas' system, which covers mature areas close to existing infrastructure, rather than less-explored or frontier areas, viewed as more contentious in Norway.

The recipients include Norway-focused names such as state-controlled Equinor, Aker BP and Sweden's Lundin Energy, as well as major international players Shell, TotalEnergies and US upstream company ConocoPhillips, and mid-sized companies such as PGNiG of Poland, Germany's Wintershall Dea, Austria's OMV and Canada's Suncor.

"This year's awards show that there is still great diversity among the players, with a good mix of small and medium-sized companies alongside major international players," the Norwegian Petroleum Directorate said.

Transition role

The offers provide reassurance on Norway's commitment to maximizing petroleum extraction, while the UK has suspended licensing and other European countries have moved to phase out oil and gas. However, the Norwegian system of numbered licensing rounds covering frontier areas is undergoing a hiatus.

Norway is viewed as a stalwart of European hydrocarbon production, with crude production twice the rate of the second-largest producer, the UK, and the country a mainstay of gas supply to the UK and the continent. Norwegian crudes Oseberg, Ekofisk and Troll are components in S&P Global Platts' Dated Brent oil benchmark, while the giant Johan Sverdrup field has arrested Norwegian output decline since it came on stream in 2019.

At the same time, the country has been reducing emissions from the production process, partly through taxation of CO2 emissions, and is a testbed for technologies such as floating wind farms and carbon capture and storage.

But the system of numbered licensing rounds covering more frontier areas, particularly in the Barents Sea, is seeing some turbulence, with the normal cycle, entailing a round every two years, expected to be interrupted this year.

Norwegian Oil & Gas has voiced concern about the postponement, which stems from the formation of a new government after 2021 elections, although the industry response appears muted as companies focus mainly on mature areas, following lackluster results from Barents Sea exploration.

"The energy crisis in Europe emphasizes the importance of Norway as a reliable and diverse energy supplier. In order for us to be able to deliver the energy Europe needs, we depend on attractive areas," Norwegian Oil & Gas CEO Hildegunn Blindheim said in a statement.

Equinor, in a statement, voiced satisfaction at being offered stakes in 26 licenses, adding it intends to participate in 25 exploration wells offshore Norway this year, mainly in mature areas. "Most of the wells will be drilled in the North Sea, some in the Norwegian Sea and a few in the Barents Sea," Equinor said.