Energy-hungry Europe warms to Norway

Amid frantic newspaper headlines about the possibility of a new Cold War, more and more governments around Europe are talking about their need for “energy security”.

What most of them actually mean is that they are not sure whether or not to trust the Russians.

Norway remains one of only two major fossil fuel exporters in Europe

There are only two big exporters of fossil fuels in Europe: Russia and Norway, so the choice – for countries without energy reserves of their own or fast depleting them – is limited.

And, undiplomatic as it is to admit it, the Norwegians stand to do very well out of the current political situation.

Officially, a healthy and productive competition exists between the two countries who share a border well above the Arctic Circle.

“We are also partners,” says Norway’s Prime Minister, Jens Stoltenberg, “because both Russia and Norway have an interest in the development of the European oil and gas market.

“And we welcome them into the market, because the market will be bigger if there are several suppliers.”

Mr Stoltenberg was speaking at the opening of an international conference about offshore energy in Stavanger, southern Norway.

Transparency

And, alongside the reassurances to his Russian neighbours, he did hint at his country’s trump card, when asked why the rest of Europe should take Norway as its energy supplier of choice.

Norway offers a reliable energy supply and a stable democracy

“We are a reliable supplier. And we have proved that over many years. And we have a very transparent, open energy sector.”

The head of the conference, ONS Director Kjell Ursin-Smith, was prepared to go even further.

“The situation is very interesting for Norway, of course. We are looked upon as a stable nation, whereas Russia still has a tainted reputation in that respect. So I think we will try to prove that we are a stable producer of oil and gas for Europe.”

The proof of the UK’s commitment to Norway as a gas provider of the future is a massive new pipeline – the biggest engineering project of its kind in the world – known as Ormen Lange.

The pipeline, whose name means “giant serpent” in old Norse will stretch from the Norwegian North Sea fields to Easington on the East Yorkshire coast.

Further afield

Some 745 miles of steel tubing have been painstaking laid up and down the canyons of the seabed, designed to deliver about 20% of the UK’s domestic gas needs for the next 50 years. It came on stream late last year.

The Ukraine issue sent a shiver down the European energy spine and Georgia is a recent episode which will focus a lot of minds. Malcolm Wicks, UK energy minister

The days when Britain could rely on its own reserves to be self-sufficient in oil and gas are long gone – with a current annual depletion rate of about 8% a year – so there is no choice but to look abroad.

Britain has always made a virtue of its lack of political interference in the energy market, preferring to make deciding on a supplier a matter of pure economics and stress the need for “diversity of supply”.

But things might be changing.

“We’re aware of what’s going on now”, says the UK Energy Minister, Malcolm Wicks.

He still stresses the need to source from more than one country, more than one route.

High stakes

But, he adds, referring to the incident in 2006 when Russia turned off gas supplies to its neighbor in order to force higher prices: “The Ukraine issue sent a shiver down the European energy spine and Georgia is a recent episode which will focus a lot of minds.

“I think we have to be – how can I put it? – streetwise, when it comes to issues around energy security. Norway is a great partner to have. It’s a very sophisticated democracy with a great record when it comes to human rights. So the new pipeline is a good piece of democratic politics.”

The proportion of its energy western Europe has to import is likely to rise to about 70% in the coming decades, so the market is guaranteed and the stakes are high.

It remains to be seen whether the big two suppliers – Norway and Russia – will clash or co-operate when it comes to developing what is a potential El Dorado of the North – vast swathes of Arctic territory, largely in the Barents Sea, which new technology is opening up to oil and gas exploitation for the first time.

The disputes have already begun as to who owns what territory. Vast amounts of money are to be made.

Norway has known great wealth for nearly 40 years now, mostly thanks to its fossil fuel resources.

Russia, with an average per capita income still about a tenth the size of that of its tiny Scandinavian neighbor, has not.

And in these days of ‘new’ Russia rediscovering its confidence, reasserting its power in the world, observers of geo-politics can almost certainly expect fireworks.