OPINION: In energy terms, Norway’s response to the Covid-19 pandemic for the oil and gas sector was not typical in European terms, but it looks savvy now.

While the UK government seemed to go along with the view that the collapse in demand for oil would hasten the demise of fossil fuels, Oslo decided to provide decisive support through a temporary scheme of tax relief for established areas of production offshore Norway.

The driver of these tax relief measures was as much about protecting jobs and the economy in times of change, but they also ensured that Norway’s oil and gas industry was in a robust state when energy security became Europe’s most pressing issue.

The results were evident as Norwegian oil and gas sector companies began presenting their quarterly results this week.

Record activity

Aker Solutions’ subsea division boasted margins of 16% and the company also reported record activity on the tenders front, and a ballooning secured backlog.

Among the operators, Aker BP began reaping the dividends of its counter-cyclical swoop for Sweden’s Lundin, with production almost doubling to 412,000 barrels of oil equivalent and net profit catapulting fourfold to $783 million.

Spurred by the tax incentives, Aker BP has been maturing field development projects that promise a net 900 million barrels of new resource to the company, and is ready to push them out in time to qualify for the temporary tax rules which were introduced in 2020.

Aker Solutions also highlighted a burgeoning business in engineering and consulting in the energy transition segment, and profit margins that look sure to grow as more decarbonisation business moves to the execution phase.

Times are difficult, but opportunities and rewards can also be gleaned.

(This is an Upstream opinion article.)