OSLO Norway on Friday slashed about a third off its oil and gas resource estimate for the waters off the Lofoten and Vesteraalen islands, bolstering those who oppose opening up the pristine Arctic region for drilling.
The Norwegian Petroleum Directorate, a government agency tasked with developing the country's offshore oil and gas riches, said the Arctic island waters could hold around 1.3 billion barrels of oil equivalent.
This estimate comes after seismic studies of the waters and compares to a previous one of about 2 billion barrels. Norway's government is due to decide on Lofoten drilling in late 2010.
Environmentalists argue that keeping the Lofotens free from drilling is the only way to avoid accidents that may irreparably damage its eco-system, rich fishing waters and image as one of Europe's last tourist destinations unspoiled by modern industry.
"The amount of oil in Lofoten and Vesteraalen indicated today means that we would only prolong Norway's oil era by a year or half a year. The question is: is it really worth it?," asked Rasmus Hansson, Secretary General of the World Wildlife Fund in Norway.
"This is an area with global environmental value," he told Reuters.
Norway's powerful industry, led by national champion Statoil, has said it needs access to the region to continue the North Sea's state oil boom.
The Norwegian government said it would consider the information in Friday's report, in conjunction with an environmental report released Thursday to assess its decision on whether to open the area for drilling.
"We will use the next six months to assess the reports and examine these questions," Energy and Oil Minister Terje Riis-Johansen told reporters.
Norway is the world's No. 5 oil exporter and No. 3 in natural gas, but its oil output peaked in 2001 and has been declining faster than expected as North Sea fields mature.
The Norwegian Petroleum Directorate said the expected future net value of oil and gas resources in the Lofoten area was 500 billion Norwegian crowns ($85.79 bln), based on a price of barrel of oil at $80 in the short-term, rising to $97 in 2030.
The Directorate also gave a broader range for the region's resource estimate at 76 million to 372 million cubic metres of oil and gas equivalent (478 million-2.3 billion barrels).
Despite the cut in estimates, the oil industry was upbeat about the resource estimates for the region.
"It is very promising ... There are possibly big quantities of oil and gas in that area," said Gro Braekken, head of the Norwegian Oil Industry Association.
Asked whether the figures were disappointing, Braekken said they were but that they were still in the range of previous estimates. "There will be opening for exploration in the end," she told Reuters.
(Editing by James Jukwey)