Chevron becomes the first major oil company to exit the Norwegian continental shelf.
According to the Norwegian oil and energy ministry, American oil firm Chevron will become the first oil major to formally exit the Norwegian continental shelf.
It is also seeking to sell its interests in the British North Sea in order to focus on onshore shale production in the USA and operations in Kazakhstan.
The move follows the likes of Exxon Mobil, BP, and Shell scaling down their presence in Norway oil and gas. In an oil-free future, will we look back on this moment as the beginning of the end?
Reuters reports that Chevron has agreed to transfer its 20-percent stake in an exploration license in the Arctic to Norway’s DNO. “Chevron Norway shuts down its activities in Norway and leaves the Norwegian Continental Shelf permanently”, says the statement.
A Chevron spokesperson confirmed the reports to Reuters but said the deal would take a number of months to close. The ministry has agreed to the transfer on condition that Chevron guarantees to cover its share of decommissioning costs at the Draugen oilfield.
What's next for Norway?
If the trend continues it shouldn't pose a threat to Norway's energy supply, the problem will be a financial one.
That's because Norway's domestic energy needs are met almost entirely through renewables. Thanks to the country's unique topology, hydropower provides more than 95% of domestic energy production.
However, profits from licenses on the Norwegian Continental Shelf are funnelled into the Government Pension Fund Global, also known as the Oil Fund.
Established in 1990, the fund invests the surplus from the Norwegian petroleum sector.
It holds more than 1% of global stocks and shares, making it the world’s largest sovereign wealth fund. The government is limited to the amount it can withdraw from the fund each year to fund a deficit in spending.
At the time of writing the fund is worth more than 8,000,000,000,000 Norwegian kroner, so although there will be no short-term problem, it is a turning point for Norway's fortunes.