Norway is among the world's largest exporters of oil and gas, with an annual oil production of approximately 2 million barrels per day and gas production of 4 trillion cubic meters per year. Most of Norway's natural gas exports were transported to European Union (EU) countries via Norway's extensive export pipeline infrastructure. In Russia in 2016, by comparison, almost 90% of Russia’s 7.5 Tcf of natural gas exports were delivered to customers in Europe via pipeline. In Europe, exports from Norway account for nearly a third of natural gas consumption - or enough to cook every third meal in France, Germany and the United Kingdom.
Norway was the third-largest exporter of natural gas in the world after Russia and Qatar in 2015. In 2015, the petroleum and natural gas sector accounted for almost 40% of Norway's export revenues and more than 15% of the country's gross domestic product (GDP).1 Norway's petroleum and other liquids production peaked in 2001 at 3.4 million barrels per day (b/d) and declined to 1.8 million b/d in 2013 before growing to slightly less than 2.0 million b/d in 2015. Natural gas production, on the other hand, increased nearly every year since 1993, except for a small decline in year-over-year production in 2011 and 2013.
Hydropower is the principal source of Norway's electricity supply, accounting for 97% of total electricity generation in 2014. In June 2012, government officials from Norway, Germany, and the United Kingdom confirmed their plans for subsea electric power connections between their countries to strengthen the northern European electricity grid and to increase supply security.
Offshore hydrocarbon deposits were discovered in the 1960s, and development began in the 1970s. Production increased significantly in the 1990s as new fields come on stream. The growth of the petroleum sector has contributed significantly to Norwegian economic vitality. Current petroleum production capacity is approximately 2.6 million barrels per day. Production in gas has increased rapidly during the past several years as new fields are opened, with crude oil production in decline. Total production in 2009 was about 239 million cubic meters of oil equivalents, approximately 50% of which was crude oil. This represented a decline in crude oil production over the previous year, accompanied by sharp increases in gas and liquefied natural gas (LNG) production. Hydropower provides nearly all of Norway's electricity, and all of the gas and most of the oil produced is exported.
Norway is the world's fifth-largest oil exporter and third largest gas exporter, providing much of western Europe's crude oil and gas requirements. In 2008, Norwegian oil and gas exports accounted for approximately 50% of total exports. In addition, offshore exploration and production have stimulated onshore economic activities. In 2008, over 34% of state revenues were generated from the petroleum industry; taxes and direct ownership ensure high revenues. Foreign companies, including many American ones, participate actively in the petroleum sector. The oil industry directly employs slightly less than 30,000 people; over 200,000 are employed in petroleum-related activities.
Petroleum resources are expected to become less abundant and less commercially exploitable over time and may be reaching a plateau. However, innovative use of extraction technologies has extended the lives of fields far beyond their expected closures. Declines in petroleum extraction revenue may be offset by increased revenue from the extraction of natural gas. For example, Norwegian natural gas production is projected to increase through new and existing fields, such as Snohvit and Troll. Given that the energy industry affects virtually every sector in the economy, diversification remains Norway's greatest challenge.
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