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Jens Ulltveit-Moe. Image courtesy of EnovaNO/Youtube.

A group of oil and gas industry experts warned Sunday that investments in the Barents Sea offshore play could prove to be “a financial disaster” for Norway’s exploration and production companies.

At the Arctic Frontiers conference in Tromsø, Norway former Petroleum Geo-Services chairman and investor Jens Ulltveit-Moe said the Barents Sea will not yield large scale oil production.

“Investing in infrastructure to facilitate for fossil fuel exploration in the Barents Sea will double your trouble,” Ulltveit-Moe said.

Dwindling reserves coupled with spiking production costs are already curbing investment in Norway’s offshore Arctic play.

Last week, Norway’s Statoil and Sweden-based Lundin Petroleum ended talks to build an oil terminal for Norway’s Arctic region after determining the resource estimates for the area were too uncertain to commit funds, Bloomberg said.

Ulltveit-Moe said declining demand from European and Chinese consumers and increasing alternative energy investment will also severely impact the profitability of new Arctic projects.

Norway is expected to announce a new licensing round for the Barents Sea in the coming months.

“Those licenses will be licenses to losing money,” argues Ulltveit-Moe and continues.

Ulltveit-Moe warned that pouring funds into investment heavy Arctic ventures would be a “financial disaster” for Norway’s state owned producers.

“If some companies will enter the Arctic, go ahead, but for Norway as a nation it will be a financial disaster. State investments for infrastructure in the north aimed at oil and gas activities in the Barents Sea will be like investing in a white elephant. The infrastructure will not be needed.”

Curbed North Sea investment has already caused service companies in the area to layoff hundreds of workers and shelve projects.

However, not all of the conference’s attendees were as pessimistic about the future of Arctic drilling.

Director of Norway-based Petro Arctic Kjell Giæver said the steep costs of Arctic upstream activity will prove worthwhile, especially as demand for coal drops off and demand for natural gas picks up.

“The world needs oil. If looking at Europe, the Barents Sea and the Arctic is the only place to find new resources. It is the oil that has created modern Norway,” Giæver said.

Giæver brushed aside concerns about the financial viability of Arctic projects, arguing that some Arctic fields could break even at $50 per barrel.