Norway Oil Minister Signals Lofoten Ban to Last Until 2017

Norway’s Oil Minister Ola Borten Moe said he would recommend keeping a restriction on oil exploration off the northern islands of Lofoten and Vesteraalen until at least 2017 to protect the fishing industry.

While the restricted areas will ultimately be opened to oil producers Borten Moe said today he wouldn’t recommend starting an impact study of the areas until at least 2017.

“I’ve noticed opposition to oil and gas activity from fishermen in this region,” he said in a webcast presentation from Svolvaer, northern Norway. “I take that seriously. That’s why I don’t wish the opening of new acreage for now.”

Oil companies such as Statoil ASA (STL), which operates about 80 percent of Norway’s oil and gas production, have lobbied to open the areas before the country’s Labor-led government last year decided to delay a decision on whether to initiate an impact study until after September’s parliamentary elections. It opted instead to collect information on the restricted areas, a step short of an impact study, which is a formal step necessary before any area can be allotted to the oil industry.

“I’m surprised by the minister’s recommendation,” said Gro Braekken, director-general of industry lobby group Norwegian Oil and Gas, in an e-mailed statement. “The conclusion should be the launch of an impact study.”

Prime Minister Jens Stoltenberg wasn’t available to comment, said his adviser, Sindre Fossum Beyer.

Wildlife Breeding

For the industry and labor unions the area offers opportunity to extend Norway’s oil age, which since it started about 40 years ago has helped build the world’s fourth-richest nation per capita. The area may hold as much as 3.4 billion barrels of oil equivalent, according to KonKraft, which represents companies and the biggest labor union, LO. The Norwegian Petroleum Directorate’s estimate ranges from 500 million to 2.3 billion barrels, most of it oil.

The waters off Lofoten and Vesteraalen contain unique cold- water coral reefs and provide breeding grounds for wildlife ranging from cod, haddock and halibut to seals and sperm and killer whales, according to the WWF. The archipelago is also home to some of Europe’s largest seabird colonies, according to the environmental group.

Borten Moe, a member of the Center Party, said he favored developing open areas south of the Lofoten and Vesteraalen islands, while the rest of the contested areas should be opened later. At the same time, he said petroleum activity in the area was “fully defendable” from an environmental point of view and posed no threat to fish or fisheries.

The minister announced in September that he would not seek re-election in September next year and had no plans other than to manage his farm.

Limited Impact

Reports published earlier today by the Oil Ministry on the effects of petroleum activity in the region said environmental risks are deemed to be low and that opening the restricted areas could generate as much 55 billion kroner ($9.7 billion) in economic activity onshore over the next decades and create 37,000 jobs.

While the Stoltenberg government was divided over whether to start the impact study, Norway’s main opposition party, the Conservative Party, has said it would seek to open the areas as soon as possible if it wins next year.

Norway, the seventh-largest oil producer in the world, is moving farther north in an effort to boost reserves as output from aging North Sea deposits dwindles. While gas production reached a record in 2010, oil output was almost halved last year from its peak in 2000.

To contact the reporter on this story: Mikael Holter in Oslo at mholter2@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman in Oslo on at jbergman@bloomberg.ne

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