The Norwegian Ministry of Petroleum and Energy offers 61 production licenses on the Norwegian continental shelf in the Award in Pre-Defined Areas 2020 (APA 2020).
I am pleased to offer 61 new production licenses in this year’s APA round to a diverse range of companies. These companies have shown great interest in gaining access to new exploration acreage, illustrating the industry’s confidence in continued profitability from exploration on the Norwegian continental shelf. This is good news for the Norwegian state as resource owner, says Minister of Petroleum and Energy, Tina Bru.
The 61 production licenses are located in the North Sea (34), the Norwegian Sea (24) and the Barents Sea (3). 30 different oil companies, ranging from the large international companies to smaller domestic exploration companies, are offered ownership interests in one or more production licenses. Of these, 18 companies will be offered one or more operatorships. The licenses are awarded with work-programme commitments or as additional areas to such licenses.
The licensing rounds constitute a basic pillar in our petroleum policy. The APA-rounds now include the majority of available exploration acreage on the Norwegian Continental Shelf (NCS). Exploration providing additional discoveries is vital in order to maintain a high level of activity, employment and revenue over time from Norway’s largest industry. I am impressed by how the industry has dealt with the challenges of 2020, also when it comes to the applications for new acreage. I now eagerly await the commencement of activity and the resulting discoveries, Bru continues.
The first licensing round on the Norwegian continental shelf (NCS) took place in 1965. The activity started in the North Sea, and exploration in the Norwegian Sea and the Barents Sea started around 15 years later. Thus, Norway now has more than 40 years of experience with petroleum activity in all sea-areas on the NCS.
The Petroleum industry is Norway’s largest sector in terms of value-creation, state revenue, investment and export-value. The industry has a significant share of national employment, directly or indirectly, and contributes to activity across the country. The industry also stimulates positive business-, technology- and societal development in Norway.
The competence and competitiveness in the industry also lead to positive ripple effects into other industries.
Since the first oil discovery was made, the sector has contributed to over 15 700 billion NOK in value creation. It has also given the Norwegian state a net cash-flow of over 6 700 billion NOK since the start of the new millennium. The State’s net cash-flow from the petroleum sector in 2021 from is estimated to be approximately 99 billion NOK, something that approximately equates to an income of 75 000 NOK for a family of four. An active exploration policy, including regular licensing rounds on the NCS, will facilitate new discoveries. This in turn will contribute towards securing state revenue, value creation and employment, all of which is important in order to maintain Norway’s welfare over time.
The award of new exploration acreage takes place in two equal licensing rounds. The numbered rounds take place in the least known exploration areas, which for all practical purposes now means remaining parts of the deep-water areas in the Norwegian Sea and parts of the Barents Sea. Acreage in the best-known exploration areas is awarded in the annual APA-rounds. As a consequence of the fact that exploration has been going on for decades, the majority of the North Sea, large parts of the Norwegian Sea and an increasing area in the Barents Sea is now included in the APA-rounds.
The only difference in the process for the two rounds is in how the authorities stipulate the applicable area. In the numbered rounds, this happens after proposals (nominations) from the companies. This gives the authorities the best possible basis for announcing the areas that will give the most information about the regional geology and thus, effective exploration. This approach is not needed in the APA-rounds, where the key challenge is to identify resources in a timely manner in order to best utilise existing and planned infrastructure in the area.
The petroleum activity on the NCS is conducted with great emphasis on health, safety and environmental standards. Exploration, development and production take place with low emissions to air. Greenhouse gas-emissions is a part of the EU Emissions Trading System (ETS). In addition, a high CO2 –tax is paid. This policy gives the companies financial incentives to reduce their own emissions, as demonstrated by the industry’s initiative to cut emissions from the activities on the NCS. In a system like the ETS, the only way to reduce total emissions is to reduce the number of quotas available.
The level of safety on the NCS is high, and regular exploration-activity, development and production have no proven negative effects on the natural environment. As in all other industrial activity, petroleum activity leads to the risk of accidents with potential consequences for the lives and health of its employees, for established infrastructure and for the natural habitat. Great efforts have therefore been made to avoid large-scale accidents.
Potential damage to the natural environment is limited to large accidental oil spills. The probability of an oil-well blow-out is extremely low, and there are strict requirements in place for emergency preparedness in order to reduce the consequences in the event of an accidental oil spill. In certain areas, restrictions have been placed on exploration drilling in oil-bearing layers for parts of the year. During 50 years of petroleum activities, no accidental oil spills have reached Norwegian shores, and no damage to the marine environment has been proven.
Offer of licenses to 30 licensees:
(Number of licenses /operatorships)
Aker BP (10/8)
AS Norske Shell (1/1)
M Vest (2/0)
One Dyas (6/0)
Petrolia NOCO (3/1)
Vår Energi (10/5)
Wintershall DEA (16/4)
Image source: Courtesy of Equinor
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