Inspired by TV drama State of Happiness, EEEGR chair Kevin Keable looks at how the UK and Norway have fared in their respective Southern North Seas hydrocarbon industries, and how they are navigating the energy transition in their own way.
I have been watching State of Happiness on BBC iPlayer; a drama series about Stavanger’s (and Norway’s) rise to fame and riches in hydrocarbon production along with all the trials and tribulations that brought.
I have very fond memories of my time working in the oil and gas industry in Stavanger back in the 1980s. Then there were a couple of pubs and restaurants, black and white TV (all in Norwegian) and expensive beer and wine.
From the moment oil and gas began flowing from North Sea fields in the 1970s, the United Kingdom and Norway were handed a singular opportunity. Each possessed abundant petroleum resources, but they chose distinctly different ways to manage them.
Today, as both nations pivot toward net-zero goals, those early decisions continue to echo, influencing their approaches to energy security, economic policy and climate strategy.
Stavanger rapidly grew in the 1980s and 1990s as the oil and gas industry developed. It was so fast you could literally see the massive offshore structures growing out of the factories and fjords overnight.
When oil and gas discoveries began to transform our economies, Norway instituted a firm hand in the industry. It created a national oil company (then called Statoil, now Equinor), levied high taxes on production (nearing 80%) and, crucially, established large government ownership stakes in major fields.
The thinking was straightforward: petroleum riches belonged to the nation, so a significant share of profits should be reinvested for long-term benefit. Over time, Norway channelled these revenues into what is now the world’s largest sovereign wealth fund, valued at well over a trillion dollars.
For a while, both countries basked in the fortune of booming oil and gas output. Throughout the 1980s and 1990s, production soared. The UK reached its oil peak in 1999, at around 2.6-2.7 million barrels a day, while Norway’s own peak trailed just a couple of years behind.
To give an idea of that volume, it would fill 5,300 double decker buses, which could stretch all the way from Ipswich to Norwich – every day!
Both governments enjoyed budget windfalls; but like two quite different children, one spent all their pocket money on sweets and comics, and the other saved for their education and later life.
Those decisions still matter. With state equity and high taxation, Norway could fund not only social programmes but also a massive “rainy day” fund, insulating the economy from oil price swings.
Meanwhile, North Sea production gradually declined, and by the mid-2000s, we were once again importing more oil and gas than we produced. Norway has exported the vast majority of its hydrocarbons since day one and continues to do so.
Norway leans on hydropower for nearly all domestic electricity, giving it one of the world’s lowest carbon power systems. The main challenge to its net-zero target is that it still exports large volumes of oil and gas.
Policymakers in Oslo see carbon capture and storage, plus possible offsets, as ways to square continued production with climate goals. And thanks to the sovereign wealth fund, Norway can invest heavily in emerging technologies like floating offshore wind, hydrogen and carbon capture without significant financial strain.
The UK, meanwhile, faces a steeper hill to climb. We used coal extensively for electricity until the 2010s, then turned to natural gas and renewables to clean up the grid.
Today, offshore wind is a clear success story, and officials have set ambitious targets for wind capacity by 2030. Yet Britain lacks Norway’s financial cushion and still relies on global markets for a sizeable share of its gas and oil.
The government has outlined carbon budgets and policies to gradually phase out fossil fuels, but debates continue to swirl around how to keep energy bills affordable and ensure reliable supply at the same time.
Energy security remains a central concern for the UK. With North Sea fields depleting, the UK faces the challenge of balancing decarbonisation with the need to keep homes heated and industries powered.
The legal decision on Rosebank was a setback for the industry and will not, in itself, reduce the UK’s carbon output unless the oil and gas it would have produced is replaced by renewables.
Ironically, since 80% of Rosebank is owned by Norway, if the UK does not produce from it, we will likely import an equivalent amount of oil and gas from Norway – resulting in no reduction in carbon emissions while also foregoing significant revenue. Norway, for its part, still enjoys surplus production, especially of gas, making it a key supplier to mainland Europe. High gas prices in recent years have further bolstered Norway’s sovereign wealth fund.
Looking ahead, both nations face significant challenges. The UK must capitalise on its abundant offshore wind resources, advance nuclear power, scale up carbon capture and storage (CCUS), and develop emerging hydrogen technologies to stay on track for net zero.
The ability to attract sufficient private investment, navigate the political and social tensions surrounding rising energy costs, and overcome resistance to new infrastructure will be pivotal in shaping the next two decades.
Meanwhile, Norway may need to tighten climate policies or reduce production in response to international agreements. However, its substantial sovereign wealth fund provides a financial buffer, giving it greater flexibility to adapt to shifting energy and economic landscapes.
Ours and Norway’s Southern North Seas have been a huge part of our past and will remain in our future for decades to come as we transition towards net zero. Investment in both is key, for wind, natural gas, hydrogen and carbon sequestration.
This story is also published in Insight Energy magazine, covering the latest news from the UK's energy sector. Read the latest edition here.
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