Norway to pause frontier oil, gas licensing despite energy crunch

Norway's government will not issue any frontier oil and gas licences during the duration of its current parliament, which runs until 2025, under a budget deal struck between the minority government and the opposition Socialist Left party. The move comes despite mounting pressure on Norway from its European oil and gas customers to ramp up supply, as the continent struggles with its worst energy crisis in decades.

Norway holds two types of oil and gas licensing rounds: annual Awards in Predefined Areas (APA) contests, which offer acreage in well-developed areas with infrastructure, and numbered frontier rounds, which license out rights to areas that are under-explored. The latter rounds provide exploration opportunities that are generally higher-risk, but could yield potentially significant rewards.

While there is broad support for continued oil and gas exploration from the minority government comprising Norway's Labour Party and Centre Party, the administration had to reach out for support from the Socialist Left to get the national budget passed. And the Socialist Left is seeking to bring an end to exploration and make Norway less reliant on hydrocarbon revenues.

As a result of the budget deal, Norway's 26th numbered round will not go ahead while the current parliament remains. 

Norway wrapped up the 25th numbered round in June last year, awarding only four production licences – one in the Norwegian Sea and three more in the Barents Sea. The number of companies participating in the numbered rounds has seen a notable decline in recent years. Only seven took part in the 25th contest, versus 11 in the 24th three years earlier, and 25 in the 23rd in 2016.

The budget deal has no bearing on Norway's APA contests. The latest awards under that type of round was made in January this year, with 28 licences in the North, Norwegian and Barents seas going to 28 operators. Authorities have received applications from 26 companies in the APA 2022 contest, with awards due early in 2023.