Norway is realizing it will have to do without the deep pockets of the biggest oil companies as it seeks to extend an era that has made it one of the world’s richest countries.
The most recent blow came when only 11 companies applied for new blocks in the Arctic Barents Sea, touted as the country’s most promising area for exploration. Chevron Corp. and ConocoPhillips were absent after bidding the last time, while Exxon Mobil Corp. and Total SA remained out of the race. Of the five super-majors, only Royal Dutch Shell Plc applied.
“It’s a warning and a cause for reflection,” said Stale Kyllingstad, chief executive officer of IKM Gruppen AS, one of the biggest suppliers to Norway’s oil industry. “The Norwegian shelf isn’t as popular anymore. It’s a concern.”
An historic three-year slump in the industry has seen Exxon and BP Plc relinquish their role as field operators in western Europe’s biggest producer. The landscape is changing in the aging North Sea basin in Norway and the U.K. as companies search for higher margins in projects such as liquefied natural-gas or U.S. shale. Smaller, more specialized companies, some backed by private equity, are stepping in.
Read more about Norwegian concerns with Big Oil’s exit
The indifference to Norway’s Arctic packs a special sting. The area is thought to hold half of the country’s undiscovered oil and gas, or almost 9 billion barrels, and success in the Barents will be key to stopping a further decline in the country’s production in the 2020s. Financial muscle will be needed to develop finds in a region with little infrastructure.
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