* Seas off Lofoten islands home to world's largest cod stock
* May hold 1.3 billion barrels of oil equivalent
* Controversial issue to be among top debates of election
OSLO, Jan 31 Norway's ruling Labour Party is set
to support oil exploration off a pristine northern archipelago,
bringing to a head controversy over drilling in the Arctic in
the run up to elections this year.
The seas off the Lofoten islands, perched some 200 km (124
miles) north of the Arctic Circle, have unique cold water reefs
and are the spawning grounds of the world's largest cod stock.
The islands are also popular with tourists, attracted to
their spectacular nature, with snow-capped mountains plunging
into the sea and activities like hiking, fishing and whale
But the seabed may hold some 1.3 billion barrels of oil
equivalent, making it a prime area of interest for oil firms,
such as Norway's Statoil, which has pushed for the
areas to be open to drilling as oil production in the North Sea
Oil output in Norway, the world's eighth-biggest exporter
with a population of just 5 million, is expected to fall to a
25-year low in 2013.
Two years ago, and after months of dispute, Labour struck a
deal with its small coalition partners to forbid oil exploration
off the islands until the parliamentary term ends in 2013.
"Given all the knowledge we have of the area, we believe it
is a natural step to conduct an impact assessment study," Helga
Pedersen, Labour's deputy leader, told Reuters.
State-controlled Statoil is leading the way in exploring the
Arctic's oil wealth, but a number of oil companies are also
moving into the region in Russia, Canada, Greenland, Alaska and
north of Iceland.
Despite some poorer numbers in the past month, Norway's
economy remains one of Europe's strongest and it has also wisely
put aside $700 billion in oil revenue over the past two decades
to provide for a future when its resource wealth runs out.
Much of its current prosperity, however, is based on the oil
and gas industry and the government is also under pressure from
its conservative opponents in the north of the country of five
Environmentalists condemned Labour's move and said they
would campaign hard to convince voters not to back parties that
support drilling off Lofoten.
They will also lobby members of the Labour Party, which has
to formally adopt the new policy at its party conference in
"Drilling in Loften ... not only threatens precious natural
resources, it also threatens several thousands jobs in the
fishing and tourism industries," said Nina Jensen, head of the
Norwegian branch of the World Wide Fund for Nature (WWF).
With Labour's new stance, Norway's top three parties all now
support drilling around Lofoten but government support is not
Elections are due in September and the winning party may be
forced to rely on one of Norway's smaller parties, who generally
oppose exploration in the Lofotens, to form a coalition.
The Conservatives, the expected winners in the vote, are
seen willing to compromise on the issue if this is needed to win
the support of a coalition ally.
Similarly, Labour's two current partners are also opposed to
drilling in Lofoten.