Arctic Oil Licenses on the Line in Norway Supreme Court Appeal

Climate activists have spent the past two weeks in Norway’s Supreme Court, in a bid to drag western Europe’s biggest oil producer out of the Arctic.

Greenpeace and a local group called Nature & Youth have already been rebuffed in Norway’s appeals court. But since then, new evidence has emerged that the environmental groups hope will be a game changer.

The Supreme Court case ended on Thursday without providing a date for a verdict. A person close to the court who spoke on the condition of anonymity said a verdict was likely before Christmas.

Norway, which is the biggest owner of oil giant Equinor ASA, opened itself up to climate suits after amending its constitution in 2014, to reflect its support of the Paris Climate Agreement. The case against Norway tests its new law, which states that “everyone has the right to an environment that secures health, and to a nature where productivity and diversity are preserved.”

Inside Norway’s oil industry, there’s little concern the constitutional change can be interpreted as a ban on oil exploration.

“The probability of such a scenario is zero,” Per Magnus Nysveen, head of analysis with energy consultant Rystad Energy, said.

But legal experts who have tracked the case from the get-go now say the verdict could go either way.

Seven Years

Hans Petter Graver, a law professor at University of Oslo, says Greenpeace and Nature & Youth have a chance at victory, now that new evidence has been made available.

Graver points to a document that’s been tucked away from the public for seven years. More importantly still, it’s been withheld from parliament. Graver says if the contents of the document had been known to lawmakers, parliament might not have unanimously backed Arctic exploration in the first place.

The document contains calculations by the Norwegian Petroleum Directorate, which contradict evidence used in the legal battle so far. The directorate’s figures show that exploration in the contested area is unlikely to be profitable. Government figures presented to parliament showed a potential exploration value of $18 billion. The Attorney General has apologized to the Supreme Court for failing to produce this evidence earlier.

If Norway loses, 10 exploration licenses awarded in 2016 in the Arctic Barents Sea might no longer be valid.

Though the new evidence brought forward raises questions about how profitable exploration is, Norway is keen to avoid any precedent that might limit its access to new fields as existing production slows.

According to Graver, if the latest evidence sways the Supreme Court, it could become impossible to award more licenses or open new fields “unless significant mitigation measures are taken, such as storing the same amount of CO2” as is produced.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.