It’s no news that Europe is facing a severe gas crisis. Russia and its allies have been disrupting the natural gas market, pushing prices up and reducing supply.
Meanwhile, one country is riding high on the success of its own natural gas exports to Europe admist the crisis: Norway.
Norway is gaining from the European gas crisis
That Norway is becoming wealthier as a result of the conflict is without dispute. The state’s prominence in the oil and gas business is well-established. Overall, Oslo anticipates revenue of over $109 billion from the petroleum sector this year. Which is an increase of $82 billion from 2021. The country’s wealth fund now has an investment pool with a value of 1 trillion.
The money made from energy is being called “obscene” by critics. The prime minister of Poland has accused Norway of indirectly “preying” on the turmoil in Ukraine. And has called on Oslo to share some of its “extra, colossal” profit with Ukraine.
U.S. firms have also taken heat for what some see as excessive profits from selling natural gas to Europe. The proximity of Norway and the government’s heavy participation in the oil and gas business make an already difficult position even more so.
Norway denies the allegation of profiteering from the gas crisis
The Norwegian government has denied allegations of profiteering. According to them, astronomical costs are just the cost of doing business in a limited supply market. To wit, they bring up the country’s backing of EU sanctions, its provision of military aid to Ukraine, and its work to supply Europe with the gas it needs.
In order to help offset the costs of high power prices for European consumers, the European Union (EU) has consented to a windfall tax on certain energy producers. Moreover, a “solidarity payment” from fossil fuel businesses.
Norway is not a member of the European Union, but some believe it could elect to join or work with the EU on additional measures. Such as a ceiling on gas prices.
The Norwegian government hasn’t showed much interest in either. Even though the state owns a large portion of the sector, when questioned about the business’s high costs, officials insist the issue is one for the industry to address.
Last week, Norway’s Ministry of Petroleum and Energy announced that its export targets had been exceeded by 2 bc/m3 (billion cubic metres per day). This means that Norway exported 7 bcm (billion cubic metres). This is more than expected in the first eight months of this year alone. That quantity is equivalent to about three months worth of total consumption for Germany alone.
Why is Norway thriving amidst the gas crisis
Norway is one of the world’s largest exporters of oil and natural gas. And, its offshore fields account for about 20 per cent of production within the European Union. The country is the second largest gas supplier to Europe after Russia. Norway has become a major supplier of natural gas to Europe, about 35 per cent of all EU demand. Moreover, the crisis in Ukraine has allowed it to increase its market share.
As a result, there are now plans for further expansion of infrastructure in order to handle further growth in demand for Norwegian liquefied natural gas (LNG).
Opinion of critics of Norway gaining from the war
A handful of Norwegian lawmakers have been advocating for months that any oil profits above projections for 2022 be put into a “solidarity fund”.
They argue that it is unfair and unwise to hoard such a large sum of money while the Ukrainian people are suffering, European economies are on the verge of downturn, and elevated markets are hitting the developing world.
In a response, Norwegian Green Party lawmaker said: “It is not our fault that Putin is waging this energy war on Europe. What we do with the money, though, is entirely up to us.”
So if you were wondering how Norway is benefiting from the European gas crisis, well, now you know. It turns out that this tiny country known for skiing and fjords has found a way to become more important than ever before.
While many people are worried about what might happen if Russia starts ramping up its military presence in Ukraine again, Norway is doing just fine.