Don't give up on oil, Norway warns Britain

Telegraph

30-04-2025

Norway will never turn its back on the North Sea as Britain has done, its energy minister has said in a rebuke to Labour's net zero pledges.
Terje Aasland told The Telegraph that Norway had 'a totally different view' to the UK on the oil and gas industry which he said creates jobs and wealth.
Mr Aasland said: 'We want to develop [the North Sea] for the long-term, because the oil and gas industry and the service industry is really important. It saves jobs and creates a lot of value for Norwegian society.
'I think in the UK, the oil and gas industry has contributed in just the same way – until now.'
Ed Miliband, the Energy Secretary, has banned all new drilling for oil and gas in the North Sea as part of his bid to help Britain hit net zero by 2050.
However, Mr Aasland, who is an electrician by trade, said the process of switching entirely to renewable energy sources would be a slow process and Norway expected to be sending fossil fuels to Britain 'for many decades'.
Norway has amassed the biggest sovereign wealth fund in the world largely thanks to its vast investments in oil and gas. The fund is currently worth around £1.3 trillion, equivalent to £235,000 for every Norwegian.
The country is one of the biggest investors in the North Sea, with over 7bn barrels of proven oil reserves. In addition to fossil fuels, Norway also owns swathes of the UK's prime real estate, with significant investments in London's West End including stretches of Covent Garden, Regent Street and Soho.
Mr Aasland's comments come as Mr Miliband and Sir Keir Starmer face increasing pressure over their net zero stance following mass blackouts across Spain, Portugal and parts of France earlier this week.
Red Eléctrica, Spain's national grid operator, has since said the power cuts were caused by a drop in solar power generation. Spain has seen a massive increase in renewable and low carbon electricity generation in recent years, with green energy sources replacing fossil fuels such as coal and gas, as well as nuclear.
Spain's Socialist prime minister, Pedro Sánchez, was accused on Wednesday of putting green ideology ahead of energy security.
Alberto Núñez Feijóo, leader of the opposition People's Party, said Mr Sánchez was covering up information about the cause of the power cut and prioritising green ideology in his energy policy.
In the UK there are now growing signs of a civil war within Labour over its green policies after Sir Tony Blair said on Tuesday that the Government's current net zero policies were 'doomed to fail'.
The former prime minister, who has advised Sir Keir informally, appeared to back down on Wednesday and insisted he supported Labour's plan to reach net zero by 2050. However, Downing Street failed to guarantee Mr Miliband would still be in post by the next election.
In addition to banning North Sea licences, Mr Miliband and Sir Keir have increased the so-called windfall levy on oil and gas producers which charges a 78pc tax on their profits.
Asked what the impact of such policies would have had on Norway, Mr Aasland said: 'We would have seen investments going to other places in the world.'
He added: 'I think if you want to support industry for the long-term, you have to be predictable, you have to have a stable framework, and you have to work together with the industry.
'During the pandemic we saw the supply chains for the oil and gas industry were running out of contracts so we made a tax package to the industry so they could develop more resources in a difficult time – and I got a lot of projects approved.
'That means the Norwegian oil and gas production situation now is quite good. Last year, we produced 124bn cubic metres of gas that we exported to the European market. Norwegian production is now at a peak and will stay there for three to five years.'
Norway became Britain's primary source of gas last year as UK output shrank in the wake of the windfall tax and a ban on new licences.
In the year to September 2024 the UK relied on Norway for 29bn cubic metres of gas, supplied by subsea pipeline and costing consumers £10bn.
Another £10bn was spent buying Norwegian oil. It means the UK paid Norway the equivalent of £714 for every UK household last year alone.
Mr Aasland said he expected Norway's one-sided relationship with the UK to continue as net zero policies accelerate the decline of Britain's North Sea energy industry.
He added: 'Norway has 30pc of the European market. We expect more and more European countries will invest in renewable energy which we will also do in Norway, but gas will deliver the base load capacity that is really important to maintain [stability] in electric systems.
'I think the pipeline gas from Norway will be one of the last sources of gas that the UK stops using.'