Oil exploration in the�Lofoten archipelago has become a hot topic in Norwegian coalition talks

Arctic drilling ban key issue in Norwegian coalition talks

Norway’s incoming Government are expected to uphold a drilling ban in the Arctic waters in order to secure a coalition.

The country is western Europe's biggest oil and gas producer and oil firms have today written to the incoming ruling parties asking them to repeal a recent tax hike and open the sensitive Arctic Lofoten archipelago to exploration.

In April the outgoing Labour party voted for an impact study, a precursor to any exploration, but drilling around the Lofoten islands has now become one of the top issues in coalition talks among the four election-winning parties.

Needing the votes of the small parties for a majority, some analysts expect the Conservatives and the Progress Party to yield on Lofoten and uphold a drilling ban, forcing oil companies into more remote and difficult waters.

Although the top two parties which will make up the government favour opening the area, which could hold around 1.27 billion barrels of oil equivalents, the Liberals and Christian Democrats have both said they will fight to keep the oil industry out of Lofoten to protect its pristine environment, its tourism and the world's largest cod stock.

But energy firms argue it takes 15 years to start production from the time an area is opened to energy firms, so a delay now would impact production beyond 2025, when output in the region is already seen falling.

"To curb the production decline on the Norwegian continental shelf beyond 2025, new areas need to be opened up urgently," the Norwegian Oil and Gas Association, which represents dozens of producers including majors such as Statoil, BP, Chevron, ConocoPhillips, Royal Dutch Shell and Total, said in letter to the four parties.

"Keeping the northeastern Norwegian Sea closed for another four years prevents a comprehensive and cost-effective development of the shelf," it said.

It also argued that a new oil tax, the first in decades, will reduce the profitability of marginal projects and will likely lead to the cancellation of new developments, further reducing production.

The Conservatives, Progress, the Liberals and the Christian Democrats begun closed-door coalition talks today and a final deal is not expected for several weeks.

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