Norway Opens Way For Barents Exploration, Not Lofoten

STOCKHOLM (Dow Jones Newswires), March 11, 2011

Norway's ruling three-party coalition Friday announced it will carry out an assessment of the environmental impact of exploring for oil and gas in the Barents Sea, but will delay the start of a study in the Lofoten archipelago of the Norwegian Sea, reaching a compromise on a controversial issue.

Prime Minister Jens Stoltenberg said at a press conference that an environmental impact assessment study of the Barents Sea, a key step toward exploration, will start as soon as Norway has reached a final boundary agreement with Russia.

The government said it will delay environmental assessment in the Lofoten region during the current parliamentary period that runs until 2013 but will start collecting information that could be used in a possible future impact study.

"We have reached a good and well-balanced solution how to treat oil, gas, fish and environment", Stoltenberg said.

Friday's announcement will be cheered by environmental organizations but will be met with resistance from the oil industry, which is eager to explore new and untapped areas as it faces a rapid depletion of existing North Sea reserves.

Norwegian Oil Industry Association Chief Executive Gro Brakken said postponing the Lofoten study is dissatisfying, but he welcomed the information gathering-plan for the area. Opening up for Barent Sea exploration is positive, she said, but cannot measure up to a Lofoten exploration.

Norway's solution was also criticized by oil and gas giant Statoil, the largest operator on the Norwegian continental shelf.

"The government's decision is not the one that Statoil and the Norwegian oil and gas industry have argued", Chief Executive Officer Helge Lund said in a statement, adding the company will continue to work towards an impact assessment for Lofoten.

Lund said it takes on average 15 years from opening an area for exploration until the start of production, and said a lack of new discoveries would lower production on the Norwegian continental shelf considerably after 2020 as no new acreage has been opened there since 1994.

The petroleum sector is Norway's largest industry and accounts for 47% of its total exports. In 2008, the country was ranked as the world's sixth-largest oil exporter and the 11th-largest oil producer. It was the second-largest gas exporter in the world, and the fifth-largest producer of gas.

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