Both the above points are standing out as different individually compared to other countries and so does clearly the combination.

Are the two facets opposed to each other? What is the future going to look like and will Norway be able to make the fossil free sustainable turn?

Let us have a closer look into this.

First, let us look at the oil and gas activities; what does it look like and how important are these for Norway. Thereafter, we will look at the sustainable transformation opportunity.

All numbers in the following are based on the situation before the Corona lock down was decided upon, unless other is mentioned. The main source is Norsk Petroleum.

* See RobecoSam ranking and ISS ranking

Oil and gas related activities in Norway – What does it look like?


The Norwegian continental shelf is in total 2 279 965 km2, around 6 times the area of onshore Norway. In this area oil and gas extraction is taking place, but also fishing, another important activity for Norway.

FIGURE 1 – The active fields and concessions in the Norwegian continental shelf

Source: You can find the interactive map here:

The products

The production from different reservoirs (the well stream) contains oil, gas and water in various combinations. To get marketable products, the production from the reservoirs must be both separated and treated. The production from different reservoirs varies from oil with low gas content to almost dry gas (methane with only small amounts of other gases).

The product groups
• Crude Oil
• Natural Gas
• Condensate

Oil and gas related activities in Norway – How much unexploited resources are there?

The current estimation is that only 47% of the oil and gas resources under the Norwegian continental shelf has been exploited.

Oil and gas related activities in Norway – How important are they for Norway?

Some metrics

If you exclude the indirect activities like suppliers, the sector represents (Source: National Budget 2020, before the Corona lock down was decided upon):
• 14% of Norway’s GDP
• 19% of the state’s revenues
• 19% of total investments
• 37% of total export (products and services)

The export value of products

In the global crude market, Norway is a small player with production covering about 2 percent of the global demand.
Norwegian production of natural gas covers approximately 3 percent of global demand, however, as an exporter Norway is a significant country.
Norway supplies about 25 per cent of the EU gas demand. Nearly all oil and gas produced on the Norwegian shelf is exported, and combined, oil and gas equals about half of the total value of Norwegian exports of goods.
This makes oil and gas the most important export commodities in the Norwegian economy.

FIGURE 2 – Export value per product type (NB! this is not the state revenue)


Oil and gas related activities in Norway – Employment and tax on revenues?

The oil and gas industry plays an integral part of the overall Norwegian employment rate. A significant proportion is employed either directly or indirectly in the petroleum sector in Norway. In recent year, the oil and gas industry has streamlined their operations and adapted to a lower activity level, both domestically and globally. In 2017, approximately 140 000 were directly and 225 000 people were directly or indirectly employed in the Norwegian petroleum sector. That represent around 5% and 8% respectively, of all employees in Norway. Per end November 2019, the unemployment in Norway was 3.8%, very low compared to most countries.

These employees pay tax on their salaries to the state and to the municipalities in addition to the employer tax paid by the companies.

Oil and gas related activities in Norway – How is the Norwegian model different?

The society’s resources and revenues

The main principle is that searching, development and operation shall create a maximum value for the Norwegian society and that revenues shall benefit the state, and that way the whole society. This is done through taxation and direct activities in the field.

The two main revenue sources are:
1) All oil companies operating in Norway are taxed the 22% normal company tax plus a special petroleum tax of 56%, 78% in total. For 2020 these taxes are estimated to bring in 132 bn NOK.
2) The State’s Direct Financial Interest (SDFI) is a system under which the Norwegian state owns holdings in a number of oil and gas fields, pipelines and onshore facilities. It also included the Norwegian state’s holding in Equinor. For 2020 these activities are estimated to bring in 85 bn NOK.

The total expected net revenues for 2020 from the oil and gas activities is 245 bn NOK. In 2008, this topped to over 500 bn NOK.

FIGURE 3 – Direct state revenues from oil and gas activities


The Government Pension Fund Global

These state’s oil and gas related revenues are directly transferred to the Government Pension Fund Global.
Per October 2019 the fund had over 10 000 bn NOK. Today, 24 April 2020,it is still over 10 000 bn NOK despite the corona linked fall in the markets, due to the depreciation of the NOK. You can see the market value of the fund here:

FIGURE 4 – The size of the Government Pension Fund Global

Source: NBIM 24 April 2020

Since 1 January 1998 up until end 2019, the fund has returned 6.1% annually. The net return in the same period was 4.2%

The Norwegian government’s use of the Government Pension Fund Global

The Norwegian government can withdraw and use money from the fund, but only by following strict rules. The idea is that the capital shall not be used; only a part of the expected long term returns. Theoretically, the Norwegian state can then take out from the fund every year and forever.
Up until 2017 the government used maximum 4% and between 2017 and expected 2020 it will be maximum 3%. (The Corona lock down effects, may lead to a higher use this year). The expected long-term returns were adjusted down from 4% to 3% in 2017.

FIGURE 5 – The real and maximum spending of money from the Government Pension Fund Global

Source: Norwegian Government November 2019

Oil and gas related activities in Norway – Environmental issues?

Environmental and climate considerations are an integral part of Norway’s policy. A range of policy instruments ensures that actors in the industry take environmental and climate considerations into account during all phases of their activities, from exploration to development, operations and field closure. In addition, production of the remaining resources on the Norwegian shelf will generate substantial value creation, but to realise this potential, new knowledge and technology must be developed. Research and technology is therefore an integral part of Norway’s policy of the petroleum industry.

What is being worked on:
• Emissions to air – How to reduce GHG emissions
• Carbon Capture and storage – There is considerable potential for large-scale storage of CO2 under the Norwegian continental shelf, and it is vital to ensure that the gas does not leak from where it is stored. This makes subsea storage the most secure option in Norway. See below.
• Discharges to sea – Understanding and working on reducing environmental impact
• Acute pollution risk – Preparedness
• Research and development – How new technology can improve resource management

Many consider use of natural gas a part of the transition towards the Paris goals when the natural gas is used to replace carbon in power plants. This is because natural gas emits 50 percent less carbon dioxide than coal when you burn it. Thus, some see it as a “bridge” fuel until zero-carbon-producing renewables can take over.

Oil and gas related activities in Norway – What if the oil and gas demand dissapear?

The first question to ask is, will it disappear and at what speed? In a world with a growing population and increasing living standards, the demand for transport and energy will increase. In the future, we will likely have alternative sources that can meet this demand. However, today, we do not have that. This will be a gradual change and the petroleum activities of Norway will remain important for the country in the foreseeable future.

Sustainable transition opportunity – The future for Norway?

Norway is already working on the transition to an «after the oil area» society and this is an ongoing public debate. The approach is to deliver oil and gas to meet the demand of the world and at the same time making the transition to a much lesser oil activity dependent country.

What are the issues to solve?

• Many employees work in the oil and gas related industry and they pay tax – They need other jobs
• There is a lot of oil and gas related knowledge and specialists – They need new competency or use it in other activities
• There is an important annual tax revenue coming from oil and gas activity – This need to be partly replaced

Strengths leading to a probable successful long-term transition

• Direct and indirect oil and gas employees represent roughly 8% of the total workforce – Important, but not massive.
• As a high competency and a knowledge economy, Norway can make a shift in competency due to its great educational system.
• The innovation capacity is very high as elsewhere in the Nordics, the most innovative region in Europe. This is a good starting point.
• Existing technological oil and gas competency is valuable in new activities like Carbon capture and under seabed storage. Norway has long experience of using CCS techniques. Since 1996, CO2 from natural gas production on the Norwegian shelf has been captured and reinjected into sub-seabed formations.

FIGURE 6 – CCS comprises the capture, transport and storage of CO₂-emissions


See more info on Norwegian Carbon capture and Storage here.

• The future may bring activities where the competency will still be useful.

o When will deep-sea mining start? The electrification of the world is creating a massive demand for rare metals from political allies. This kind of activity would require technical knowledge for over and under seabed activities. It will for sure make focus turn to the negative environmental effect from mining though, something that is not really highlighted in the acclamation of electrification today.
o Green energy from wind farms, both onshore and offshore, is an important area of development.

FIGURE 7 – Norwegian wind farm capacity in a European context per end 2018

Source: February 2019

Norway have a small wind based electricity production. This in natural as the domestic electricity demand is covered by hydroelectricity. With the increasing demand for renewable energy and possibilities to export electricity, the construction of wind farms in Norway is increasing. The country has an interesting exposure to wind, particularly offshore where several projects are being developed.

FIGURE 8 – Norwegian wind farm development

Source: NVE, April 2020. Green line marked areas are decided for development, read line marked areas are being studied. Darkest grey is hard excluded for different reasons often too little wind. Grey circles are ready for concessions, dark green circles are in operation, light green are under building and blue are given concession. Biggest circles have over 100MW capacity. Red dots are projects that have been refused.

• Norway has the Government Pension Fund Global with 10 000 bn NOK and the use of oil and gas money is limited to the expected long-term revenue estimates of the fund, currently 3%. With this limit on usage, the capital will not be consumed and can be a partial source of financing for the state budget forever.
10 000 bn NOK (870 bn EUR per 27/4/2020) represent 7.4 times the total state expenses planned in 2020. This is equivalent for France to have 10 000 bn EUR available in a fund, Belgium to have 1 800 bn EUR, Germany to have 11 000 bn EUR and Italy 6 200 bn EUR. Or USA 51 000 bn USD.
It also represents 35 times the amount the Government plan to use from the Pension Fund Global in the 2020 state budget. With other words, Norway have important financial muscles and can handle the transition to the sustainable «after oil and gas» Norway even if it should take longer or be more painful.


Oil and gas will be an important activity and revenue generator for the foreseeable future for Norway due to lacking alternatives to satisfy international energy demand. The world still need oil and gas, a quick and decided disruption in oil and gas supply would today represent a very dangerous development in geopolitical context.
As a rich knowledge economy, Norway is in a position to make a transition to a much less oil dependent economy. Norway puts sustainability at the top of the agenda and the solution is clearly in a sustainable direction. This will end well for Norway, I’m not worried.

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