Norway to tap oil fund as revenues plummet

Falling oil revenues will see Norway delve into its massive sovereign wealth fund -- the world's largest -- to balance its books next year, according to budget plans unveiled on Wednesday.

Norway to tap oil fund as revenues plummet
Norway's Troll oil platform, commissioned in 1995. Photo: Håkon Thingstad/Flickr

According to the plans, the minority conservative government will need to take out around 3.7bn krone ($450m) from the fund, which is currently estimated at some $830bn.

Prices of crude have collapsed in recent months, cutting Norway's tax receipts from petroleum extraction activities and dividends by some two fifths, leaving a hole in the 2016 budget.    “We had expected this … to occur later, around 2020. But it has happened earlier thanks to the fall in oil prices,” DNB financial services group economist Kyrre Aamdal told AFP.

“This is a milestone — but it is not of great importance as the fund should continue to grow,” he added.

By the end of next year, the fund — whose role is to pay for future welfare spending and pensions — is set to top 7.449 billion krone (804 billion euros/$904 billion), up from 7.025 billion.

Earlier this year, Norway's central bank indicated that government transfers to the fund could be threatened once oil prices slid below some $60 per barrel.

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NGOs take Norway to European Court over Arctic oil exploration

Two NGOs and six young climate activists have decided to take Norway to the European Court of Human Rights (ECHR) to demand the cancellation of oil permits in the Arctic, Greenpeace announced on Tuesday.

NGOs take Norway to European Court over Arctic oil exploration
Northern Norway. Photo by Vidar Nordli-Mathisen on Unsplash.

It’s the latest turn in a legal tussle between environmental organisations Greenpeace and Young Friends of the Earth Norway on one side and the Norwegian state on the other.

The organisations are demanding the government cancel 10 oil exploration licenses in the Barents Sea awarded in 2016, arguing it was unconstitutional.

Referring to the Paris Agreement, which seeks to limit global warming to less than two degrees Celsius above pre-industrial levels, the organisations claim that the oil licenses violated article 112 of Norway’s constitution, guaranteeing everyone the right to a healthy environment.”

The six activists, alongside Greenpeace Nordic and Young Friends of the Earth Norway, hope that the European Court of Human Rights will hear their case and find that Norway’s oil expansion is in breach of human rights,” Greenpeace said in a statement.

In December, Norway’s Supreme Court rejected the claim brought by the organisations, their third successive legal defeat.

READ MORE: Norway sees oil in its future despite IEA’s warnings 

While most of the judges on the court agreed that article 112 could be invoked if the state failed to meet its climate and environmental obligations– they did not think it was applicable in this case.

The court also held that the granting of oil permits was not contrary to the European Convention on Human Rights, in part because they did not represent “a real and immediate risk” to life and physical integrity.

“The young activists and the environmental organisations argue that this judgment was flawed, as it discounted the significance of their environmental constitutional rights and did not take into account an accurate assessment of the consequences of climate change for the coming generations,” Greenpeace said.

On Friday, the Norwegian government unveiled a white paper on the country’s energy future, which still includes oil exploration despite a warning from the International Energy Agency (IEA).

The IEA recently warned that all future fossil fuel projects must be scrapped if the world is to reach net-zero carbon emissions by 2050.

The Norwegian case is an example of a global trend in which climate activists are increasingly turning to courts to pursue their agenda.