Commodities

Denmark to stop pumping oil, gas in North Sea

PTI Copenhagen December 4 | Updated on December 04, 2020 Published on December 04, 2020

Activists nevertheless hailed the move as significant as it shows the way forward in how to fight climate change

Denmark has decided to end to all oil and gas offshore activities in the North Sea by 2050 and has cancelled its latest licensing round, saying the country is “now putting an end to the fossil era”.

The Danish Parliament voted on late Thursday to end the offshore gas and oil extraction that started in 1972 and has made it the largest producer in the European Union. Non EU-members Norway and Britain are larger producers.

Denmark is estimated to pump some 83,000 barrels of crude oil and another 21,000 barrels of oil equivalent this year, according to the government. That is relatively little in a global context. The UK produces about ten times that amount while the US, the world’s largest producer, pumped over 19 million barrels of oil a day last year.

Environmental activists nevertheless hailed the move as significant as it shows the way forward in how to fight climate change.

Denmark has been an early adopter of wind power, with more than a third of the country’s electricity production deriving from wind turbines. They are considered key in the transformation of the energy system and should enable Denmark to no longer be dependent on fossil fuels in 2050 for electricity production.

“The agreement means that a planned eighth licensing round and any future tenders have been cancelled and makes 2050 the last year in which to extract fossil fuels in the North Sea. It was backed by both the left-leaning parties as well as the center-right opposition, suggesting the country is unlikely to back off this policy. It is incredibly important that we now have a broad majority behind the agreement, so that there is no longer any doubt about the possibilities and conditions in the North Sea,” said Climate Minister Dan Joergensen, a Social Democrat.

According to official figures, the move would mean an estimated total loss for Denmark of 13 billion kroner ($ 2.1 billion). The industry has earned the small Scandinavian country over 500 billion ($81.5 billion) since the 1970s.

In October, energy group Total pulled out of the latest tender process leaving only one applicant, Ardent Oil, according to authorities.

In June, the Danish Council on Climate Change - an independent body that advises the government - recommended ending any future exploration in the North Sea, saying a continuation would hurt the country’s ambitions as a front-runner on fighting climate change.

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Published on December 04, 2020
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