The powerful oil industry in Norway dealt a big blow when opposition Labor Party, which is Norway's largest party and a traditional oil backer, said it would no longer support oil exploration off the Lofoten islands in the Arctic, reported Bloomberg.
Norway, Western Europe’s largest oil and gas producer, appears to be “walking away from billions of barrels of oil and gas,” Bloomberg said.
Norway pumps out over 1.6 million barrels of oil a day from its offshore operations, which has made the country one of the world’s richest, according to news portal Independent.
State-controlled company Equinor ASA, which is Norway's largest oil producer, has said that the access to oil in Lofoten is a requisite for the country to maintain production levels.
The Labor Party’s decision to oppose drilling in the area drew a sharp rebuke from the Norwegian Oil and Gas Association, whose chief said the industry was “surprised and disappointed.”
Meanwhile, Norway’s biggest oil union, Industry Energy, which is a long-time ally of the Labor Party, slammed the party’s decision, which was adopted less than two years after an internal party compromise on the issue.
The union’s leader, Frode Alfheim, said, the decision creates imbalances in the policy discussions for an industry that’s dependent on a long-term perspective. He also said that there are a lot of people in the industry who are wondering what the Labor party stands for.
The Labor’s opposition exposes a rift in the party as the leadership tries to reflect the population’s rising environmental concerns, while also aiming to support workers’ unions in the oil industry, the Independent said.
The move comes days after Norway’s government gave a nod for its 1 trillion dollar oil fund, which is the world’s largest sovereign wealth fund to invest in renewable energy projects not listed on stock markets.
Billions are expected to be spent on wind and solar power projects. The latest stance indicates that the wealth obtained through fossil fuels is being redirected towards future profits in renewable energy
Last month Norway’s oil fund said it would no longer invest in 134 companies which explore for oil and gas, but would retain stakes in large oil firms including BP and Shell, which have renewable energy divisions.
The environmentalists who have long been urging the government to ban the drilling near Lofoten, welcomed the move. However, some were skeptical in their reaction, noting that there could still be other areas in the Arctic where drilling continues.
(With inputs from Bloomberg and Independent.)