Don’t forget Norway

By Jarle Hetland

Date: 30/03/06

In the continuing debate over the future of energy in Europe, much of the focus has been on the unreliability of supplies, in particular from the Middle East countries and from Russia.

Next to nothing has been said about internal energy market's biggest supplier of energy - Norway.

As the recently published Green Paper on energy emphasised, Norway is one of the EU's most important energy partners and will remain so for the foreseeable future. A member of the European Economic Area (EEA), the Scandinavian country is in fact one of the EU's most reliable sources of energy.

Recent tensions with Russia over its gas-supply lines to Europe and political instability in the Middle East and northern Africa have perhaps increased the importance of Norway to the EU.

Although Norwegian gas and oil is not enough to supply the Union's current demand, and the country's North Sea reserves are dwindling, it will continue to supply European markets for a considerable amount of time.

The focus is shifting from North Sea resources to the high north and the Barents Sea. The country's first project in the area, Snøhvit, is already well under way and is expected to start deliveries of natural gas in late 2007. The development of the coast of Hammerfest will also see the construction of Europe's first liquefied natural gas (LNG) plant. And, despite a warning in February from the United Nations Development Programme, Norway is poised to explore its fossil resources in the Arctic region.

It will, however, be several years before Norway - and the EU - will benefit from the Barents Sea developments. At a recent meeting in Brussels, Bjørn Trettvoll, director of the Brussels office of Norsk Hydro, in which the Norwegian government has a 44% stake, said that there were several obstacles yet to be overcome.

Although many companies are hoping for a second gold rush for Norway's petroleum industry, the prospects are not universally rosy. Like the EU, Norway has Russia as a neighbour and several analysts have pointed out that energy has taken the place of Cold War tensions, even if Norway's Foreign Minister Jonas Gahr Støre recently said that there was a "good dialogue" between the two countries.

Norwegian companies Statoil and Norsk Hydro are also trying to get a foothold in other countries pinpointed in the Commission's Green Paper such as Algeria and the Caucasus countries.

More important though is both Statoil's and Norsk Hydro's interest in Russia, with both companies expecting stakes in the massive Shtokman gas field - operated by Gazprom - when a tender announcement is made on 15 April. The long-running border dispute in the Barents Sea is another issue for Norway-Russia relations.

Article takes a look at the role of Norway as the European internal energy market's largest supplier.
Article is part of a European Voice Special Report, 'A Common EU Energy Policy'.