Even though the Russian-Ukrainian War has been going on for seven months, Europe is still looking at all of its possibilities to strengthen its support for Kyiv and curb Moscow’s influence and financial gains. As a result of the current situation, energy policy is now among the European Union’s (EU) most pressing concerns.
The majority of Western nations started imposing unprecedented sanctions on the Moscow government in reaction to the conflict, and the EU decided to implement a partial oil embargo to cut off the flow of oil and petroleum products from Russia unanimously. As a response, Kremlin resorted to using energy as a trump card, shutting off the EU’s access to natural gas, for which it will be harder to find substitutes. These actions, which resulted in the EU being caught unawares, have led Brussels to accelerate its efforts to increase and diversify natural gas supplies.
Europe is negatively affected by self-imposed sanctions since it depends on Russian oil and natural gas. The energy crisis and rising costs due to all these reasons have shifted Europe’s focus to Norway, the world’s 11th-largest oil and 9th-largest natural gas producer.[1] Since the North Sea began to produce oil and natural gas in 1971, Oslo has been the most dependable supplier for the world and Europe.
On the other hand, the EU and Norway cooperate on various issues as the two actors share common values. Therefore, Oslo is quite advantageous compared to other alternatives that the EU is considering to reduce its dependence on Russian oil and gas.
The shortage of energy due to the disruption of Russia’s supply has led the EU cooperation to increase its cooperation with its close neighbor, with which it has reliable relations and an energy partnership. As a matter of fact, after the Ukrainian War, Norway replaced Russia as the EU’s largest natural gas supplier.
First, to offset rising energy prices, the EU and Norway resolved to work together to provide additional short and long-term natural gas supplies. In addition, within the scope of long-term cooperation, the parties agreed on overseas renewable energy, hydrogen, carbon capture, storage, and energy R&D.[2] Norway’s Petroleum & Energy Minister Terje Lien Aasland emphasized that his country is willing to increase its role in the EU energy market by stating, “Norway claims it can replace more Russian gas if Europe commits to buying.”[3] The Union then announced that it would support Norway’s efforts to bring oil and natural gas to the European market.
Reflecting Brussels’ quest for both effective and politically viable measures to deal with the energy crisis and the threat of recession, on 6 October 2022 Norway and the EU agreed to “develop joint instruments” aiming to reduce high gas prices.[4] The fast-growing energy cooperation with Norway, however, also has certain drawbacks.
The shock wave that Russia’s invasion of Ukraine caused has made it clear that Western countries require close cooperation to fend against ripples in all sectors, notably energy. However, the high prices created by the supply shortage have begun to afflict the EU-Norway solidarity. Because the Oslo administration insists on providing discounted natural gas to the EU and gains significant income by taking advantage of the market conditions.
The country’s oil revenue is expected to reach a record 933 billion Norwegian kroner (93.7 billion euros) by mid-2022. Norway’s state-controlled energy company Equinor’s net profit increased 2.5 times in the second quarter of 2022, reaching $6.8 billion. It was also noted that Oslo’s state wealth fund value reached $1.1 trillion after the war.[5] Before the Ukraine War, Norway met only 20% of the EU’s natural gas demand. This year, with its increased production capacity, Norway is expected to supply 90 billion cubic meters of natural gas to the EU. This means that it will meet about 25% of the total demand.[6]
To increase the dose of sanctions against Russia and to invalidate the “natural gas trump card” the Kremlin often refers to, Brussels has put on the agenda the introduction of a price cap on natural gas prices, just like oil. Oslo, however, opposed the price cap, and Norwegian Prime Minister Jonas Gahr Støre said he was skeptical about how well the energy problem would be addressed as a result of Norway’s natural gas price cap.[7] It is also interesting that Norway avoids the idea of supplying natural gas supply with a discount.
Mateusz Morawiecki, the Prime Minister of Poland, accused Oslo of “looting” the Russian-Ukrainian War and offered to share the revenues from oil and natural gas exports to Norway with Ukraine.[8] Although the authorities deny these accusations, it appears that Norway’s long-standing image in the world arena of advocating peace and delivering aid has developed into that of a “war profiteer.” Because despite the huge profits it has made and the calls for help, there has been no major change in Oslo’s support for the Kyiv administration.
As a result, Norway is seen as a staunch EU ally and stands out in its pursuit of alternatives to Russian natural gas. However, it is also understood that this issue is not very profitable for the EU as the Oslo administration does not meet the expectations of the Union in terms of price. As a result, the image that emerges following the introduction of the oil and natural gas embargoes will demonstrate if the EU-Norway solidarity, which has been put to the test due to economic hardships, can pass this test.
[1] “About Energy Norway”, Energi Norge, https://www.energinorge.no/om-oss/in-english/, (Date of Accession: 12.10.2022).
[2] “Norway to Increase Gas Supply to EU as Russia Deepens Cuts”, Offshore Technology, https://www.offshore-technology.com/news/norway-gas-eu-russia /, (Date of Accession: 12.10.2022).
[3] “Norway Claims It Can Replace More Russian Gas if Europe Commits to Buying” Upstream, https://www.upstreamonline.com/politics/norway-claims-it-can-replace-more-russian-gas-if-europe-commits-to-buying/2-1-1225254, (Date of Accession: 12.10.2022).
[4] “EU and Norway Agree ‘Joint Tools’ to Tackle Europe’s Gas Crisis”, Financial Times, https://www.ft.com/content/5e386cc3-463d-4417-afdf-7c1009bc948b, (Date of Accession: 12.10.2022).
[5] “Norway Gas Lifeline for Europe Is The Smart Move”, Reuters, https://www.reuters.com/breakingviews/norway-gas-lifeline-europe-is-smart-move-2022-09-09/, (Date of Accession: 12.10.2022).
[6] Ibid.
[7] “Norway ‘Skeptical’ about European Gas Price Cap, but Retains Open Attitude: PM”, SP Global, https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/natural-gas/091222-norway-skeptical-about-european-gas-price-cap-but-retains-open-attitude-pm, (Date of Accession: 12.10.2022).
[8] “Polish PM Urges Norway to Share Profits from Oil and Gas with Ukraine”, Frontier Post, https://thefrontierpost.com/polish-pm-urges-norway-to-share-profits-from-oil-and-gas-with-ukraine/, (Date of Accession: 12.10.2022).
