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2024-04-25 Caucasus/Russia/Central Asia
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'War profiteer': how Norway has been making money on gas since the beginning of the Special Military Operation
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Direct Translation via Google Translate. Edited.
by Pavel Anisimov
[REGNUM] On April 21, during his speech at the opening ceremony of the Hanover Industrial Fair, German Chancellor Olaf Scholz expressed gratitude to the Prime Minister of Norway Jonas Gahr Støre and the government of this country for providing Germany with gas after the severance of trade relations with the Russian Federation and hoped that Oslo would remain the main supplier for Germany gas in the coming years. Germany is one of Norway's largest European partners in both political and energy matters. And this is primarily due to gas imports. The Norwegian company Equinor (then called Statoil) has had close energy cooperation with Germany since it began exporting Norwegian gas in 1977.
Continued from Page 5
For many years, Russia was the leader in gas supplies to Europe. For comparison: in 2021, the share of Russian gas imported by the EU was 43.9%, and Norwegian - 18.6%.
But after the introduction of anti-Russian sanctions and the policy of abandoning Russian energy resources on the European market in general and the German market in particular, the volume of gas supplies from Norway began to increase.
Thus, in 2022, Equinor provided 33% of the total natural gas needs of Germans, and in 2023 - already 37%.
And Norway is not going to stop there. At the end of 2023, Equinor and the German Sefe signed a large-scale gas contract. Over the next 15 years, Equinor will supply gas worth NOK 585 billion to Germany.
“This is a response to Europe’s need for long-term and reliable energy supply, while at the same time opening up the opportunity to decarbonize industry on a large scale,” Equinor CEO Anders Opedal said at the signing of the agreement on December 19, 2023.
In addition, a letter of intent was signed under which Germany could become a major buyer of hydrogen between 2029 and 2060.
It is worth noting that the Norwegian Prime Minister spoke about planned cooperation with Germany in the field of hydrogen technologies back in early January 2023.
Equinor and German energy company RWE will work together to replace coal power plants with gas. Further, according to the plan, natural gas will be gradually replaced by hydrogen.
For this purpose, it is planned to establish large-scale production in Norway. Hydrogen will be produced using natural gas, but with CO₂ removed. It will be exported to Germany via a new gas pipeline.
In addition, the energy from wind power plants will be used to produce hydrogen in the future; their joint development is also included in the plan.
In the context of the global problem of climate change, experts believe that natural gas is an effective solution during the transition to green energy.
Gas has a much smaller impact on the global climate than coal and oil. And it can be used to produce the same hydrogen, the advantage of which is that it does not emit CO₂ when burned.
So if Equinor succeeds in its plans to combine hydrogen production with CO₂ capture and storage, experts predict a positive impact on tackling the climate crisis.
LOOKING NORTH
However, against the backdrop of climate problems, discussions about the prospects for the extraction of oil and gas resources are still ongoing. In Norway, there is relatively broad political agreement that the way forward is development rather than an end to fossil fuel production.
With Germany largely cut off from Russian pipeline gas, the door is open for Norway to further expand its market share and position itself as Germany's main supplier. This is also why the country does not plan to stop producing energy resources.
And the key to maintaining its high level will be the expansion of activities beyond the Arctic Circle. In addition to increasing production from existing fields, new projects will be critical to maintaining current gas export volumes until the 2030s, or even increasing them.
This includes both those deposits whose development has already been approved, as well as potential ones beyond the Arctic Circle. In 2023, the government approved concessions for the development of 92 Arctic areas, a record number.
The main declared goal is to meet the needs of Europe. And in order to achieve this goal, Norway partly sacrificed its own principles, because previously many leading politicians spoke about a gradual reduction in hydrocarbon production and that Arctic resource deposits should be left untouched.
It is also worth noting that this energy policy of the Norwegian authorities runs counter to statements by both the EU and the United States regarding possible bans on mining in the Arctic.
Back in September 2023, Norway was not allowed to speak at a meeting of heads of state and government during a discussion of climate problems within the framework of the UN General Assembly session, citing the fact that the country did not have proposals for specific measures for the transition to green energy.
And last November, Jonas Gahr Støre categorically rejected a proposed plan to phase out oil and gas production on the continental shelf.
In this regard, we should not forget the fact that energy exports bring huge revenues to the Norwegian treasury, especially against the background of increasing gas prices.
Shortly after the start of the SVO and the introduction of anti-Russian sanctions, Russia cut off gas supplies to the EU, which led to a sharp increase in gas prices and, consequently, to an increase in Norwegian income.
In November 2023, the dissertation of Eirik Jalte and Ida Elisabeth Oeberg Gosland, written as part of the master's program at the Norwegian Higher School of Economics, became available to the general public. Its authors found that Norway “earned” 334 billion Norwegian kroner (approximately 31.6 billion US dollars) from the Ukrainian conflict in 2022 alone.
After this information appeared, the leader of the Green Party, Arild Hermstad, called Norway a “war profiteer,” emphasizing that he was embarrassed to be a Norwegian because his country was profiting from someone else’s misfortune.
Norway's windfall has led to new demands for additional gas revenues to be donated to Ukraine.
In late November, Hermstad said his party had put forward a proposal to parliament that the money Norway earns would be used to rebuild Ukraine and neighboring countries, and to help Europe fight its dependence on Russian gas.
However, the current government categorically rejected this, pointing to the program to support Ukraine adopted in February 2023 - the so-called Nansen program.
Its cost is estimated at 75 billion Norwegian kroner (approx. 7 billion dollars), it is designed for five years. The program is aimed at supporting Ukraine in the military, civil and humanitarian spheres.
However, this amount does not compare with Norway's income. To understand: in just one day (August 26, 2022), Norway earned 8.7 billion kroner from gas sales, which was an absolute record.
The escalation of the Arab-Israeli conflict in October 2023 also caused a jump in gas prices, which again played into the hands of Norway in terms of increasing its oil and gas revenues and became a reason for accusations of making money from the suffering of others.
Returning to Støre’s visit to Germany, we also note a remarkable fact: it was during this visit on April 21 that the Norwegian Prime Minister officially announced that the government intends to significantly increase military support for Ukraine.
We are talking about amounts of billions of crowns, which will go in addition to the 75 billion already allocated as part of the “Nansen program”. It is possible that such a turn, which essentially means a rejection of previously made statements, is associated with the approval by the US Congress of assistance to Kyiv in the amount of $61 billion on April 20.
On April 22, Rasmus Hansson, a member of the Norwegian Storting from the Green Party, said that the money previously allocated for Ukraine should not be stretched over five years, but spent this year.
According to him, “Norway must do everything possible to stop Putin,” and “no one will need the Nansen program if Russia wins.” Apparently, there will be heated debates on this issue in the Storting.
Against the backdrop of anti-Russian sanctions and the cessation of Russian gas supplies to Europe, Norway has become a kind of “life jacket” for European countries, especially Germany.
In this regard, the government does not intend to reduce hydrocarbon production in the near future - on the contrary, it is now looking further north, beyond the Arctic Circle, in order to develop new fields.
And the EU’s earlier statements about the inadmissibility of resource extraction in the Arctic do not serve as an obstacle to such a policy of the Norwegian authorities.
It is worth noting that the country of the fjords hardly intends to pursue a new energy policy for purely charitable purposes - state revenues from the sale of resources have increased significantly and reached unprecedented amounts.
However, it should be expected that, against the background of increasing earnings, as well as under pressure from its own political elites and NATO allies, Norway will increase its financial support for Kyiv.
Given the current price environment, taking into account the unstable geopolitical situation and the lack of competition with Russia for gas supplies to Europe, Norway’s role as a resource supplier is significantly increasing.
The question of how much this will cost European importers, including Germany, remains open.
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Posted by badanov 2024-04-25 00:00||
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