It is boom time for Norway’s energy industry.
Oil and gas revenue is through the roof, as Norway steps in to replace the Russian fuels that have vanished from the European market.
Norway has overtaken Russia as the EU’s biggest gas supplier and expects a $104 billion tax windfall from oil and gas this year, more than four times the amount it earned before the war in Ukraine.
The rush for North Sea fossil fuels has exposed Norway to criticism from climate activists, however, as it positions itself as a green leader while using oil and gas to fund its generous welfare state.
A visit by Prime Minister Jonas Gahr Store to a gas terminal in Norway’s far north on Tuesday put the spotlight on what the wildlife charity WWF called “the most aggressive extraction strategy in the Arctic”.
But there are hopes that a greener future is in sight, as Norway looks to cement its position as a European energy giant by using the sea for offshore wind.
A report handed to ministers on Wednesday said there was a “massive need” for more renewable energy to meet Norway's climate targets.
And the recent find of rare earth metals on the Norwegian seabed, including elements used in wind turbines and electric vehicles, looks set to keep the North Sea waters at the heart of the European economy.
'Booming interest'
Norway has been extracting oil since the 1970s, and the desire to keep control of its underwater riches, including its fish, was central to its rejection of EU membership in a 1994 referendum.
The government is facing calls to view offshore wind as an opportunity akin to Norway's oil discovery, though the oil, gas, and fishing industries may have objections.
John Olav Tande, an offshore wind scientist and director of research centre NorthWind, said the wind and fossil fuel industries were competing to attract the best workers.
“There is a booming interest in offshore wind. We need to develop and deploy this technology at a scale that is unheard of,” he told The National.
“Most people are in favour of offshore wind. Not everyone, of course. Fishermen are not necessarily going to salute a new wind farm.
“But they see that offshore wind is of great importance in suspending climate change, and if you don’t suspend climate change then this will have a strong negative effect on the oceans.”
Norway has a target of generating 30 gigawatts of offshore wind power by 2040, which would involve building 1,500 turbines, compared with just two that are currently in operation.
Wednesday's report by an independent energy commission said the country needed “more of everything — faster,” including solar power and onshore wind.
“Abundant access to renewable power should continue to be a competitive advantage for Norwegian industry,” it said.
But building that up will take time, and some activists are unhappy that the government is offering up to 92 new licences for oil and gas exploration, most of them in the northern Barents Sea.
The Norwegian branch of Friends of the Earth said the expansion “weakens Norway’s climate credibility”.
“This shows that the government is closing both its eyes and its ears in the face of the climate crisis,” said the organisation’s chief Truls Gulowsen.
Ministers say new discoveries are needed to maintain a sufficient level of oil and gas production.
They also note that the vast majority of Norway’s domestic electricity consumption is covered by hydroelectric power and other clean energy sources.
However, its oil and gas reserves are in high demand across Europe after Russia's exports were cut following its invasion of Ukraine.
In 2021, Norway was a distant second in gas supply to the EU, providing 18.6 per cent of the bloc’s imports compared to Russia’s 43.9 per cent.
By the third quarter of 2022, Norway was in first place, supplying 25.4 per cent of EU gas imports, while Russia’ share was down to 15.3 per cent.
Equinor, Norway’s biggest oil and gas company, made $24.3 billion in the third quarter alone, and the government’s tax take has more than quadrupled thanks to high energy prices.
“We have to be very conscious of the fact that the inflow came against a tragic backdrop in Europe,” Nicolai Tangen, the head of Norway’s sovereign wealth fund, said on Tuesday.
“But it is an isolated mathematical fact that when oil and gas prices are higher, there is more revenue to the government.”
Norway has used its newfound clout to lobby against an energy price cap as a guest at EU meetings.
Still, the crisis is not all good news for Norway. Food prices have increased sharply, and the wealth fund lost the equivalent of $163 billion last year as investments in other companies suffered, it was announced on Tuesday.
Security on Norway’s continental shelf was tightened after explosions on the underwater Nord Stream pipelines in Danish and Swedish waters, and reports of increased drone activity.
Norway’s seabed may yet prove even more valuable, thanks to the discovery of vital metals such as cobalt, magnesium and lithium — a market currently dominated by China.
The Norwegian Petroleum Directorate said the minerals on Norway’s shelf could cover “many years of global consumption” and included metals on an EU list of critical raw materials.
“Costly, rare minerals such as neodymium and dysprosium are extremely important for magnets in wind turbines and the engines in electric vehicles,” its technology director Kjersti Dahle said.
