Tuesday

3rd Aug 2021

Denmark to stop North Sea oil drilling in 2050

  • Denmark warned that banning fossil exploration any earlier would oblige the country to compensate companies for their investment in drilling plants and equipment (Photo: joiseyshowaa)

The Danish government has decided to end all its oil and gas exploration in its section of the North Sea by 2050, putting pressure on neighbouring oil producers, such as Norway and the UK, to follow Copenhagen's climate leadership.

"We are now putting an end to the fossil era," said Danish climate minister, Dan Jorgensen, describing the agreement as a "new, green course for the North Sea" that benefits everyone.

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Denmark's offshore fossil extraction started in 1972, making the country the largest producer of oil and gas in the European Union. However, non-EU countries like Norway and the UK are even larger producers.

Denmark already has one of the most ambitious climate targets in the world - with a 70 percent emissions-reduction target by 2030, and aiming to reach net-zero emissions by 2050.

The debate on the future of Denmark's oil production has been top of the political agenda since the beginning of the year, when the government postponed its eighth tender round, which would grant international companies a licence to extract oil and gas in the Danish part of the North Sea until 2055.

However, that licensing round - and any future tenders - have been cancelled under the new agreement, making 2050 the final year in which will be possible to search and extract fossil fuels in the North Sea.

Until then, the terms will change for the companies currently operating in the North Sea basin, the minister said, adding that this decision will cost the Danish state about €1.7bn.

The decision was supported by both the left-wing parties and the centre-right opposition in the Danish parliament last Thursday (3 December).

This resolution makes Denmark the first significant fossil-fuel producer to announce an end date for all extraction.

Three more decades

Greenpeace called it "a historic turning point" and "a huge victory for the climate" which should build momentum to end all future exploration and extraction of fossil fuels in the North Sea.

"There is no doubt that Norway and the United Kingdom, which have even greater oil production in the North Sea than in Denmark, will now be put under extra pressure to also deliver on their international commitments to slow down the climate crisis," said Helene Hagel from Greenpeace Denmark.

"This is hopefully the first step towards a total phasing out of fossil production in the entire North Sea," she added.

Denmark produced around 83,000 barrels of crude oil and another 21,000 of oil equivalent in 2020. For comparison, the UK and Norway produced about 1.8m barrels in 2019.

Meanwhile, activist Greta Thunberg slammed the decision, pointing out that Denmark will keep extracting fossil fuels for another three decades.

"This is not the 'good news' that some people seem to think. We're in a climate emergency. Act accordingly," she said on Twitter.

However, the Danish climate minister warned that ending exploration in 2030 or 2040 would have obliged the country to compensate companies for the investment they already made in drilling plants and equipment.

The cost of an oil drilling platform can be between €130m and €1.3bn, and there are about 50 in Denmark, Jorgensen warned.

Bleak outlook for North Sea fishermen

Fishermen’s leaders emerging from crisis talks yesterday with the European Commission painted a bleak picture for the future of the North Sea white fish fleet. But the Commission repeated its willingness to take the fishing industry’s views into consideration and to avoid the complete closure next year of key fishing grounds in the North Sea.

Norway expected to give in on North Sea Gas

One of Norway's standing conflicts with the EU is approaching a solution, according to Norwegian paper Aftenposten. During the coming week Oil Minister Olav Akselsen and Norwegian Prime Minister Jens Stoltenberg will be meeting EU Energy Commissioner Loyola de Palacio and Competition Commissioner Mario Monti for talks about Norway's EEA adjustment to the EU Gas Directive.

Norway's election sees new scrutiny on EEA membership

The EU is the most important market for Norwegian goods, from salmon to natural gas. But after Norway's election in September, Oslo may get a government where the majority oppose the current European Economic Area agreement.

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