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Page added on October 24, 2017

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Norway Unfazed By Peak Oil Concerns


When crude oil demand will peak is anyone’s guess. Forecasts vary widely. Wood Mackenzie says that peak demand is “very real,” and sees a decline of 4 million bpd between 2020 and 2035. Other majors including BP and Total SA see peak demand as coming between 2025 and 2040, as a result of clean energy government initiatives, slower economic growth, and wider use of electric vehicles.

Not everyone is that concerned with peak oil demand, however. Recently, Norway’s Energy Minister said the biggest problem for Europe’s largest oil and gas producer is satisfying near-term demand, which is growing faster than Norwegian continental shelf operators are making discoveries.

It might sound a bit weird that Europe’s greenest country is still so big on oil and gas, but in reality, there’s nothing weird: Oil and gas exports account for a substantial portion of Norway’s export revenues, with their value for 2016 standing at $43.84 billion (350 billion crowns), accounting for 47 percent of the country’s total export value.

Norway’s biggest customer is the European Union. Together with Saudi Aramco, Norway’s state major Statoil accounted for a fifth of the EU oil market last year. Yet demand in the EU is supposed to be falling, with rigorous policies designed to encourage acceleration of the shift to renewable energy.

Indeed, according to European Union statistics, demand is on a stable downward curve thanks to greater energy use efficiency, “structural changes in the economy”, and lower demand for fuels. Still, Eurostat notes, crude oil and its derivatives account for the biggest share of energy consumption in the 28-strong union.

That’s good news for Norway, and there’s more good news from Wood Mackenzie. The energy consultancy has forecast that although in places like Europe, Japan, the United States, and even China, crude oil consumption will plateau by 2035, the demand for petrochemicals will jump considerably.

Wood Mac expects that petrochemicals will turn into the top driver for demand growth in crude oil in the long run as fuels lose their top spot. This will continue until about 2035, the consultancy estimates.

So how is Norway responding to this demand outlook? Statoil has been on a hunt for new discoveries for a while now as oil prices rebounded from their tough last year, but it reports disappointing results at home—its Arctic drilling campaign this year produced no meaningful results, and the company said it will be back next summer to drill more.

At the same time, there are large oil fields slated to start pumping crude in the next few years. Johan Sverdrup, which is estimated to hold between 1.9 billion and 3 billion barrels of oil equivalent, is scheduled to start production in 2019. Johan Castberg, with proven reserves of some 400-600 million barrels, should start production in 2022.

This may not be enough to meet growing crude demand, but then, no demand and supply forecast is final or undisputable, so it may turn out that Minister Terje Soviknes’s worry about Norway’s ability to meet and benefit from higher oil demand might turn out to be unfounded.

By Irina Slav for

3 Comments on "Norway Unfazed By Peak Oil Concerns"

  1. rockman on Tue, 24th Oct 2017 12:29 pm 

    Of course peak demand alone is not a concern for any oil exporting country. Their primary concern is their revenue from oil exports. Which, simply enough, is export volume X oil price. Look at recent history: just a few years ago the global oil demand was less then it is today. And the oil export revenues of Norway et al was significantly higher.

    It’s not difficult to imagine that if oil were to reach $100/bbl demand would decline. But what happens if alt motor fuels sources finally develop significantly? Or if electric vehicle ownership booms as some expect? Throw in big efficiency gains by all oil consumers and demand deceases. As a thought experiment let’s say it all comes about in 2035: how low would Norway’s oil export revenue fall? Maybe a little, maybe a lot and maybe it will be significantly higher then it is today. It will depend on how much oil Norway is exporting and the price of oil. And that price will depend on the max amount of oil the world is producing 18 years from today and how much the remaining oil consumers DEMAND and can afford.

    And, of course, many such projects can be made. And, of course, the accuracy of those projections cannot be proved today. IOW peak oil, peak demand, the oil price and economic vitality cannot be viewed separately. The world’s energy dynamic is not that simple no matter how many articles like the one above tries to characterize it.

  2. Go Speed Racer on Tue, 24th Oct 2017 4:19 pm 

    LOL peak demand. Nobody will want
    oil anymore. Because everybody
    decided they prefer to push their
    Cadillac Escalade up a hill,
    rather than start the engine. Brilliant.
    What’s next for the sheeple
    and their controllers? Nobody wants
    food anymore?

  3. peakyeast on Wed, 25th Oct 2017 1:54 am 

    Interesting if those money in the bank will actually be worth something when their oil and gas extraction is decimated.

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