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Oil Prices Subdued, But For How Long?

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Norway Dismisses Rumors Regarding Lift of Drilling Ban on Arctic Islands

Lofoten Norway

The Norwegian government dismissed reports on Thursday that it might lift bans on oil and gas exploration near picturesque islands in the Arctic Ocean before elections in 2017.

Reuters reported that the Oil and Energy Ministry had sent oil companies letters rejecting news reports that the Lofoten and Vesteraalen islands would be included in an upcoming licensing round.

"That's never been the case,” the ministry wrote in a statement.

Last week, the government had asked oil and gas companies to nominate blocks for future exploration that had already been open to oil and gas drilling.

The Lofoten region, which hosts sharp mountains rising from the sea, has been closed for drilling since 2013, when the right-wing government and two central parties reached a deal protecting the area’s rich cod spawning grounds from oil interests.

Hundreds of Norwegians gathered in central Oslo on Thursday to encourage the government to pursue action against climate change and take steps to protect the environment.

"We have to ensure that the Arctic is kept off limits," Truls Gulowsen, chief of Greenpeace Norway, told Reuters.

Had the Oil Ministry allowed exploratory drilling on the islands, the government would have likely collapsed before the September 2017 elections. The two centrist parties had demanded that Lofoten be off-limits to oil interests if the minority right-wing party wanted to retain a majority of seats in the parliament in 2013.

Related: How The Hanjin Bankruptcy Could Impact Oil Prices

Last month, Norway’s government announced new plans to use profits from oil and gas operations to fund clean energy projects.

Past Norwegian initiatives in the field of environmentalism include projects to contribute $1 billion to maintain the Amazon rainforest in Brazil and donating $350 million annually to protect wildlife in Indonesia and Guyana.

“We know there is a paradox,” Vidar Helgesen, the country's climate and energy minister, admitted in an official statement. ”We have been living well from oil and gas. But there is no country in the world that has done more to undermine the oil and gas industry than Norway.”

Since 1990, Norway has diverted much of its oil earnings to its climate change sovereign wealth fund, which has become the world’s largest. The money, reaching $890 billion as of June 2014, amounts to $178,000 for every Norwegian citizen.

By Zainab Calcuttawala for Oilprice.com

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  • Marcus Rönningås on September 14 2016 said:
    There will still be countries depending upon OG, and they will pay a high premium for that. For thoose making the transition towards renewables, they will have a competetive edge. Simple as that.

    We purchase COO's for ~0,2 USD/kWh, that is a small premium to pay in order to secure our electricity. Our problem is the four cars we have in the family - it will be 3-5 years before we have made the transition to EV's or plug-in hybrids.

    So Bill, I don't think You are entirely correct in the statemant regarding energy substitutes.
  • Bill Simpson on September 09 2016 said:
    Oil is too cheap right now to go after the Arctic island oil. Wait until it starts to run out, and the price goes way up, then open up the expensive drilling up there.
    Within 15 years, people will find out how valuable oil really is. Don't kid yourself, there is no energy substitute for oil and natural gas.

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