Lackluster results diminish interest in Norway’s latest Arctic oil lease round

By Lars Erik Taraldsen on 2/28/2021

OSLO (Bloomberg) –Interest in oil exploration in the Norwegian Arctic has dropped dramatically following years of disappointing drilling results.

Only seven oil companies applied for new acreage in the Barents Sea in the latest licensing round, down from 26 in a similar round in 2013. The continued decline will be a blow to the government, which had offered 125 new blocks in eight frontier regions of the Barents.

Norway’s Petroleum and Energy Minister Tina Bru

“The number of companies is relatively low, but it’s not a big surprise,” Oil and Energy Minister Tina Bru said in an email. There’ll still be “increased petroleum activity in the Barents Sea for decades to come,” she said, citing the Goliat and Snohvit fields already on-stream and several projects under development.

The Nordic country’s oil and gas industry has been keen for new acreage to offset an expected decline in production toward the middle of the decade. The Barents is estimated to hold more than 60% of the undiscovered resources off Norway, according to the nation’s petroleum directorate. But frontier licensing there has seen a steeper decline in interest than rounds for mature areas.

While exploration in the region has been encouraged by successive governments, drilling results from companies including state-controlled Equinor ASA and Aker BP ASA have fallen short of expectations. Aker BP was not among applicants in the latest round.

Companies that applied for new acreage were:

Norske Shell AS
Equinor Energy AS
Idemitsu Petroleum Norge AS
Ineos E&P Norge AS
Lundin Norway AS
OMV Norge AS
Var Energi AS

There’s been a period of “lower interest from the global majors,” Tord Lien, former Norwegian oil minister, said in an email. “We would have to admit that the exploration results have not been exactly where we hoped back in 2015.”

The petroleum directorate declined to comment on the number of applicants in the latest round.