Norway's right-wing government wins re-election

With 95 percent of votes counted, the ruling minority coalition of Conservatives and the populist Progress Party with two small center-right allies were projected to win a slim majority with 89 seats in the 169-seat parliament.

"It looks like a clear victory" for the center-right, Solberg told cheering supporters in Oslo just after midnight (2200 UTC), following Monday's voting. "Our solutions have worked. We have created jobs," she said.

But the tax-cutting Conservative warned: "We have some challenges ahead," she said. "Oil revenues are going to be lower. We all must take responsibility."

It followed an unusually close race between the prime minister and her Labor rival Jonas Gahr Stoere who conceded defeat, but said it was a " big disappointment."

The outcome of this election is likely to have a major impact on Norway's crucial oil industry as one or more smaller parties in each of the coalitions are seeking to impose limits on exploration in the Arctic Ocean off Norway's coast.

Norway Elections at a glance

-    All 169 seats in the parliament up for grabs

-    3.76 million registered voters

-    As many as nine parties expected to win seats under a system of proportional representation.

-    Incumbent Erna Solberg of the Conservatives and Labor's Jonas Gahr Stoere faced off for the top job

-    Opinion polls showed a close fight between the two blocs

-    Taxes, public services and oil exploration among key issues

Opposition wants to take on inequality

Stoere had been hopeful as he cast his vote.

"We have to keep the qualities of Norway at its best - equity, work for all, good investment in health and education so that we remain a strong team," Stoere told reporters.

Stoere, who comes from a wealthy background, claims to champion the fight against inequality. He held key portfolios in his mentor and former Prime Minister Jens Stoltenberg's cabinets, serving as foreign minister and health minister.

Conservatives hope for historic first

Incumbent Solberg voted in her home city of Bergen on Monday, saying she was "ready for four new years." She becomes the first Conservative in over 30 years to win a second straight mandate.

In power since 2013, Solberg's coalition has promised continuity. Despite having trailed Stoere's bloc for much of the year, her government has witnessed a late turnaround in opinion polls thanks to Norway's gradual recovery from an economic slump, sparked off by a fall in oil prices. The oil and gas industry accounts for almost half of the country's export revenue.

"We have demonstrated over the past four years that we know how to handle difficult crises," she said during the campaign. "Unemployment is on the way down, growth is on the way up and we're creating more and more jobs," she said.

Read more: Norway's climate hypocrisy: Clean at home, dirty in the Arctic

ap/jm (Reuters, AFP)