Big oil headed for defeat in long Lofoten battle, minister says

OSLO (Bloomberg) -- The waters around the sensitive Lofoten islands will probably never be opened to oil exploration, according to Norway’s climate and environment minister.

Oil activity off the pristine archipelago in the Arctic circle has been a thorny political issue in Norway for years. Smaller parties -- such as the Liberal Party of Climate Minister Ola Elvestuen -- have forced successive governments to maintain a ban on drilling in return for support. Now, the balance could be shifting in favor of a definitive restriction as the opposition Labor Party, the country’s biggest political group, grows increasingly skeptical of opening the area to rigs.

“I don’t think there will be any exploration outside of there,” Elvestuen said in a meeting with reporters in his office in Oslo on Wednesday. “This debate can finally be settled, hopefully.”

Asked whether recent developments in Labor, where local chapters have come out against opening Lofoten, meant the battle had been won for drilling opponents, he said “it’s getting closer.”

Oil companies such as state-backed giant Equinor ASA have been pushing to open up Lofoten, Vesteralen and Senja to drilling to make up for a dwindling list of development projects elsewhere in Norway. The government’s two biggest parties, the Conservative and Progress parties, both favor starting an impact assessment, a first step in any move to open new areas.

The Liberals joined the government this year and will likely be followed by the Christian Democrats in the coming months. Both parties have said they favor a review of the petroleum-tax system.

Framework conditions for oil companies will be part of negotiations with the Christian Democrats as they were when the Liberals joined, Elvestuen said, declining to provide any more details on the upcoming talks or on his thoughts on the likely outcome.