By Mikael Holter

(Bloomberg) — The oil market is rebalancing, however don’t depend on ever seeing costs at $100 a barrel once more: that’s the clear message from Norway’s petroleum and vitality minister.

Brent crude has surged greater than 70 p.c from a 12-year low earlier this 12 months as a world glut exhibits indicators of easing, bringing aid to grease corporations and producing international locations like Norway, which have been pummeled by the worst market downturn in a era. While it’s “quite obvious” that the oil market will rebalance, it doesn’t imply Norway is planning — and even hoping — for costs to return to what they had been, Tord Lien stated in a Bloomberg TV interview on the ministry’s workplaces in Oslo.

“It’s better to plan for $60 and let the people who want to hope for $100, hope for $100,” he stated. “We saw oil prices hitting $140 a barrel, and that does not contribute to economic growth. So therefore I’m not hoping for it.”

The collapse in crude costs has put Norway, western Europe’s largest oil and fuel producer, at a crossroads, with investments in its offshore trade falling essentially the most since 2000 and the federal government for the primary time dipping into its $850 billion sovereign wealth fund to plug finances holes.

Even as 40,000 jobs disappeared in two years, the Nordic nation resisted deploying drastic measures, like tax breaks for the oil trade launched within the U.Okay. The Norwegian petroleum-tax system, which features a high tax of 78 p.c however affords beneficiant deductions for exploration and growth spending, is “the best” there may be and stays enticing due to its very stability, Lien stated.

Virgin Territory

Norway has as a substitute saved providing new acreage to explorers, resembling new licenses in a virgin space of the Arctic Barents Sea alongside the maritime border with Russia as not too long ago as final week. It was the primary time Norway opened totally new blocks to the trade in additional than 20 years. After crude manufacturing has dropped by half since a 2000 peak and as exploration outcomes hit an virtually 10-year low final 12 months, the Nordic nation is betting on the Barents Sea to assist it preserve output within the coming many years.

Both Norwegian authorities and the businesses concerned “have a strong belief in the possibility of finding significant resources in the Barents Sea,” Lien stated Tuesday.

Environmental Groups

Norway’s petroleum minister, himself a local of the nation’s excessive north, hit again at environmental organizations’ criticism that it was unwise to open new swaths of the Arctic to exploration as a result of offshore oil and fuel on this area, normally dearer to extract than in different areas, must stay within the floor if the world is to achieve limiting international warming to lower than 2 levels Celsius.

“To state that all the oil and gas resources in the Barents Sea aren’t profitable does not have any scientific backing,” Lien stated. “A huge part of the supply today comes out of offshore resources and huge fields that are in decline already.” Just to take care of manufacturing at at the moment’s degree 10 to fifteen years from now “demands huge investments in oil and gas production.”

While the federal government has been keen to just accept the postponement of recent tasks off Norway in the course of the present downturn, such because the Johan Castberg oil area within the Barents Sea, it should proceed to demand that oil corporations preserve investments designed to maximise manufacturing from present deposits and the place choices are time-sensitive due to present infrastructure, Lien stated. One instance is Statoil ASA’s Snorre 2040 challenge, designed to extract a further 200 million barrels of oil from the Snorre area within the North Sea.

Producers in Norway should “make sure that no resources in place on the Norwegian continental shelf are wasted due to short-term decisions,” he stated. “The companies involved in Snorre 2040 know quite well what we expect them to do. As always, I do expect the companies to follow up on the clear messages that we have given to them.”

© 2016 Bloomberg L.P