This week’s oil price action…
Oil prices fell once again…
David Cameron was the first British Prime Minister to visit Norway in 26 years, when he made his recent trip to finalise an energy deal between the two nations with his counterpart Jens Stoltenberg.
Despite all the renewable energy intentions that the UK government may profess to have it is clearly going to rely on oil and gas for the next decade or so. The new agreement will create over 1,600 jobs and ensure the steady, cheap supply of oil and natural gas for UK energy demands.
The deal also mentioned an increase in renewable energy investment between the two countries. Norwegian companies have heavily invested in the world’s largest offshore windfarm at Dogger Bank; costing $30 billion, it will provide more than ten percent of the UK electricity demand.
Cameron announced that, “there is no stronger energy partnership than between Britain and Norway. In the past five years, British companies have invested more than £13bn in Norwegian oil and gas.
In turn, Norway is meeting over a quarter of the UK's entire energy needs. And Norwegian companies are major investors right across our energy sector – of course in our pioneering oil and gas industry but also in Dogger Bank … and in crucial projects to connect up our electricity grids and so improve energy security and affordability for both our countries.
Tomorrow we will take this vital relationship to the next level with a new UK-Norway energy partnership. This will mean more collaboration on affordable long-term gas supply, more reciprocal investment in oil and gas and renewables, and underpinning all of this – a set of major new business deals creating thousands of new jobs and adding billions to our economies.”
Many fear that the deal, which focuses more on natural gas and oil than renewable energy technologies, will tie the UK to fossil fuels for the next 30 years or so, and damage its renewable energy sector and any efforts to reduce carbon emissions. Fatih Birol, the chief economist at the International Energy Agency (IEA) predicts that “renewable energy may be the victim of cheap gas prices if governments do not stick to their renewable support schemes. A golden age for gas is not necessarily a golden age for the climate.” It appears that he may be onto something.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com