Norway ranks first in the lists of natural gas exporters. It is the number one natural gas supplier of the European continent. Norway’s position in Europe was further reinforced by the sanctions imposed on Russia after the Russia-Ukraine War and the closure of the Nord Stream Line connecting Russian natural gas to Continental Europe. Therefore, Norwegian natural gas has emerged as an alternative to Russian natural gas for Europe. As a result, Norway has reached export figures in natural gas supply that it has not seen throughout history. For example, in 2022 Norway exported more than 120 billion cubic meters of natural gas. About 116.6 billion cubic meters of this was exported to the European Union (EU) and the United Kingdom. [1] Similarly, about 25% of the natural gas demand in the EU was met by Norway. [2]
While Norway’s importance in natural gas supply for Europe is increasing day by day; In a statement, the Norwegian Ministry of Petroleum and Energy announced that it will nationalize major natural gas pipeline networks after the current operating licenses expire. While most of the referenced business licenses will expire in 2028; as the justification for the expropriation, the goal of increasing the state’s control over the infrastructures, which are in a key position for the Kingdom of Norway, came to the fore. [3] Norway’s natural gas and oil businesses have long been at the disposal of the private sector with state participation.
Currently, most of Norway’s gas networks are owned by the Gassled partnership. Gassled owns gas pipelines connecting Norway to the UK and EU. The Norwegian Government has an authority ratio of 46.7% through the Petoro company, which is wholly owned by the Norwegian Government, and up to 5% through Equinor. For the rate that is not at the disposal of the Norwegian Government, the holders of this rate will be compensated in certain circumstances while the expropriation is carried out. The compensation process will be carried out within the framework of the net incomes expected to be earned by the infrastructure owners in the future.
On the other hand, the statement made by the Norwegian Ministry of Petroleum and Energy led to the reaction of the right-wing Progress Party, which is the leader of the opposition. Terje Halleland, Energy Spokesperson of the Progress Party, stated that the state already heavily controls the natural gas sector with the savings rates it maintains through Gassled. He also stated that expropriation would have negative consequences for the investments to be made on the Norwegian continental shelf. Private initiatives in the Norwegian natural gas sector, such as Gassled, also stated that they were surprised by the announcement, that the Norwegian energy sector is traditionally based on private companies and state joint ownership, and this policy is already working successfully. [4]
Despite all this opposition, it seems that the Norwegian Government’s nationalization policy in the natural gas sector will be implemented by gaining momentum. Because when it comes to the energy sector, the issue of sustainability is on the government’s agenda. While the share of the energy sector in Norway’s exports increased rapidly at the beginning of the Russia-Ukraine War; Energy prices have also increased in Europe.
Therefore, the government began to express some limitations. The subject of restrictions was primarily electricity exports. Norway wanted to ensure that the surplus of electricity production remained in the country by taking tax at certain rates from electricity exports. [5] Thus, contrary to the trend in Europe, the goal of lowering national energy prices was pursued. Subsequently, issues such as a complete ban on electricity exports came to the fore in order to protect the energy supply chain, which was endangered by the drought seasons that have not been seen for centuries in Europe. [6]
The issue of gas and oil exports was quickly integrated into Norway’s concerns about electricity exports. Reaching record levels of natural gas and oil exports has indeed increased Norway’s national income. However, the increase in national income was accompanied by the rise in service prices in these sectors. The Oslo government has also had to subsidize its citizens’ bills, taking into account the rising prices.
However, while Norway exports large amounts of natural gas and oil, it has begun to exceed its natural resource capacity. On the other hand, the transition process to clean energy or green energy, which has been on the agenda of Europe for a long time and which Norway has agreed to, has started to be undermined by Norway’s increasing production of natural gas and oil. Jul. As it can be understood, the Oslo administration has adopted the goal of increasing the role of the state in the energy sector by turning to expropriation policies. Subsequently, it was declared that the main goal of the energy sector is to provide long-term profitable production on behalf of the country.
Along with all these, Norway’s implementation of sustainable policies by nationalizing the natural gas sector by the state seems to be hindered by the EU in the current European conjuncture. Thus, in the midst of the energy crisis, EU member states preferred Norwegian energy to Russian energy.
There are several steps that Norway can take to overcome the current problem. Although it is not a member of the EU, it is part of the European Common Market through the European Free Trade Association, of which it is a member. The energy market, which is one of the components of the Common Sunday, prohibits a country from cutting off energy supplies to neighboring countries for a long period of time. The only exception to this ban is when a country declares an emergency and cuts off supplies, citing various reasons, especially security.
As a result, Norway, whose energy supply chain is in danger in the long term, may activate this exception. But in this case, Norway will lose its ability to be the number one energy destination, and the energy crisis that the EU is in will deepen even more. On the other hand, Norway may prefer to negotiate with the EU in order to sign supply agreements that are built on better conditions, anticipate long-term profits and emphasize the element of sustainability. But in this case, there are risks such as prolongation of the process by getting stuck in bureaucratic obstacles, having to make certain concessions, or no results can be obtained.
[1] “Explainer: How Does Norway Export Its Natural Gas?”, Reuters, https://www.reuters.com/business/energy/how-does-norway-export-its-natural-gas-2023-03-17/#:~:text=OSLO%2C%20March%2017%20(Reuters),such%20as%20Britain%20and%20Germany, (Date of Accession: 17.03.2023).
[2] “Noruega suministrará más gas a Europa durante el verano”, Euronews, https://es.euronews.com/next/2022/03/16/ucrania-crisis-noruega-gas, (Date of Accession: 16.03.2023).
[3] “Norway Wants to Nationalise ‘Central Parts’ of Country’s Gas Pipelines”, The Local, https://es.euronews.com/next/2022/03/16/ucrania-crisis-noruega-gas, (Date of Accession: 28.04.2023).
[4] “Norway Plans to Nationalise Gas Pipelines When Concessions Expire”, Reuters, https://www.reuters.com/business/energy/norway-plans-take-ownership-most-gas-pipelines-2028-2023-04-28/, (Date of Accession: 28.04.2023).
[5] “Norway May Tax Power Exports to Keep Domestic Prices Down”, Reuters, https://www.reuters.com/business/energy/norway-may-tax-power-exports-keep-domestic-prices-down-2023-02-15/, (Date of Accession: 15.02.2023).
[6] “Norway Considers Suspending Electricity Exports to Avoid an Energy Crisis”, Lemonde, https://www.lemonde.fr/en/international/article/2022/08/20/norway-considers-suspending-electricity-exports-to-avoid-an-energy-crisis_5994226_4.html, (Date of Accession: 20.08.2022).
