North Sea Oil and Gas firms continue drilling despite climate goals
All major North Sea oil countries are expected to continue drilling for oil and gas as they fail to agree on climate measures. The major oil-producing countries operating in the North Sea have all announced ambitious production goals for the coming years, despite pressure from European governments and environmentalists to reduce fossil fuel production in favour of renewable energy projects.
A new report found that none of the major oil and gas companies operating in the North Sea have plans to stop drilling in time to achieve the 1.5oC global heating limit. The Oil Change International report says that the U.K., Germany, the Netherlands, Norway, and Denmark have not been able to align their oil and gas policies with their climate promises under the Paris Agreement. The report suggested that the policies in Norway and the U.K. were furthest from the Paris climate agreement as they were both “aggressively” exploring and licensing new oil and gas fields. Meanwhile, the Netherlands hopes to increase its oil and gas production.
While Germany produces only small quantities of oil and gas in the region, the government has failed to set adequate climate policies for a green shift. Denmark came out on top, having reduced its oil production by half in the last five years. The Scandinavian country has set an end date for oil and gas production and has cancelled new state-initiated licensing rounds. However, environmentalists are calling on the Danish government to close loopholes that allow new licensing under certain circumstances to be closed by the early 2030s rather than in 2050.
The co-author of the report, Silje Ask Lundberg, emphasised the need for governments in the region to do more to curb oil production and act on climate pledges. Lundberg stated, “Failure to address these issues not only undermines international climate goals but also jeopardises the liveability of our planet.”
Many believe that the five North Sea countries should be leading the way when it comes to climate action, rather than contributing to the problem. These are some of the world’s richest countries and it is unjust to expect the developing world to undergo a green transition while they continue to benefit from oil and gas production. Truls Gulowsen, the head of the Norwegian branch of the environmental group Friends of the Earth, stated of Norway’s role in the North Sea, “Despite having all the tools in the world to ensure a just transition, our government’s choice is to continue to be Europe’s most aggressive oil and gas explorer. This is completely out of place, and totally unaligned with the Paris Agreement and our climate responsibility.”
The U.K. has been heavily criticised for its ongoing support of oil and gas production, as the government announced 24 new North Sea oil and gas licences in January. Licenses were given to 17 oil firms, including Shell and BP, to drill in the Central North Sea, Northern North Sea, and West of Shetland areas. Opposition MPs and environmentalists labelled the move as “grossly irresponsible” and suggested that the government was overstating the economic benefits of the North Sea and compromising the U.K.’s climate leadership.
Graham Stuart, the minister for energy security and net zero, defended the move, stating, “If we didn’t have new oil and gas licences we would import new [liquefied natural gas] from abroad which is four times as carbon-intensive as the gas produced here. I accept it’s counterintuitive but it’s not a complex argument to see it’s the right thing to do.” He added, “New oil and licences strengthen our ability to get to net zero, they strengthen and support our climate leadership.”
However, critics suggest that although the move secure billions in oil and gas revenues, it will do little to secure the country’s energy supplies or decrease energy bills because the new licences will mostly produce oil that the U.K. typically exports to European refineries. Others accuse the government of greenwashing for suggesting that new oil and gas production could ever contribute to the country’s decarbonisation efforts.
Meanwhile, in Norway, oil and gas companies plan to invest a total of $21.85 billion in 2024, marking an increase from $20.5 billion in 2023. This is an increase from the previous forecast of around $18 billion. This comes following several new developments and the expansion of existing projects, as well as inflation and a weak currency. Despite deriving around 98 percent of its domestic energy from renewable sources, Norway continues to be Europe’s largest oil and gas producer, with an output of around 4 million bpd. The government’s aim to achieve net-zero greenhouse gas emissions by 2050 appears to be at odds with its strategy to continue to explore for and develop new oil and gas fields.
Instead of leading the world in a shift away from fossil fuels to renewable alternatives, five of the world’s richest countries and proponents of a green transition continue to support oil and gas production in the North Sea. The countries have no clear plan to cut production or work together to establish steps to achieve their climate pledges when it comes to North Sea operations, undermining their roles as ‘climate leaders’.
