After the outbreak of the conflict in Ukraine, Norway has become one of the central links of energy security in Europe, writes The Washington Post. However, now the country is facing sharp criticism: Europeans accuse Oslo of trying to cash in on the crisis.
Emily Rauhala (Emilia Rauhala)Stavanger, Norway – Given the shortage in the natural gas market and the threat looming over pipeline systems, Europe has never needed Norway more than now.
And she has never been more offended by Norway before than she is now.
More than seven months after the start of the military conflict in Ukraine, this Scandinavian country turned out to be one of the central links of Europe's energy security. Now Norway, not Russia, is the leading supplier of natural gas to the EU countries. The explosions on the Nord Stream gas pipelines did not provoke a supply crisis, because the EU sharply reduced its dependence on Russian gas. In the same week, the block celebrated the launch of a new pipeline leading from Norway to Poland.
Many countries expect Norway to help them survive the winter months – and replenish their fuel reserves for many years to come.
However, although Oslo is increasing exports to Europe, this "philanthropic" country, which decides who should be awarded the Nobel Peace Prize, is facing sharp criticism from Europeans, in particular accusations of trying to profit from the conflict.
There is no doubt that the consequences of the military actions in Ukraine are making Norway richer. The Norwegian state is a major player in the oil and gas industry. This year, the oil and gas sector is expected to bring about 109 billion dollars to Oslo, which is 82 billion more than in 2021. Most of these funds will go to the sovereign wealth fund, where more than one trillion dollars have already been accumulated.
Critics call Norway's energy revenues simply "indecent." The Polish Prime Minister called on the country to share its "excessive, gigantic" revenues with Ukraine, accusing Oslo of trying to indirectly profit from the conflict.
By the way, American companies have also become the object of criticism due to the fact that they earn a lot of money on natural gas sales to Europe. However, it is the deep involvement of the Norwegian Government in the oil and gas sector that complicates the situation in Oslo.
Norwegian officials reject accusations of trying to cash in on the crisis. They set high prices for their raw materials under the influence of the forces of the market, which is currently experiencing a shortage of supply. They point out that Norway has supported EU sanctions and the allocation of military aid to Ukraine, and also helps to get what Europe desperately needs right now – gas.
The essence of the dispute boils down to what it means to be "good" in the matter of energy supplies – in the conditions of armed conflict, inflation and the climate crisis.
These issues were the focus of attention last week, when Norwegian Prime Minister Jonas Gahr Store joined other European leaders at an informal summit in Prague, where the Russian-Ukrainian conflict and the European response to it were discussed. On Thursday, Brussels and Oslo said they had agreed to "jointly develop tools" to stabilize energy markets and "substantially reduce excessively high prices." However, they did not say what it would take.
For several months now, a small group of Norwegian lawmakers has been calling for the transfer of excess profits from oil sales – that is, all income that exceeds forecasts for 2022 – to the so-called "solidarity fund". They consider it unfair – and unwise – to stash so much money at a time when Ukrainians are suffering, European economies are teetering on the brink of recession, and high energy prices are hitting the developing world.
"It's not our fault that Putin is waging an energy war against Europe," said Lan Marie Nguyen Berg, a member of the Norwegian parliament from the Green Party. "But we can decide what to do with the money we earn."
The European Union has agreed to introduce a windfall tax for some energy producers, as well as a "solidarity contribution" for companies producing fuel oil – this money will be used to mitigate the impact of high electricity prices on consumers in EU countries. Some hope that Norway, which is not a member of the EU, will decide to support these measures or work out a number of other measures together with its members, for example, limiting gas prices.
But the Norwegian government has not shown much enthusiasm on either front. Ask officials about high prices, and they will say that this is a question for industry; ask industrialists, and they will answer that it is officials who decide – despite the fact that most of the industry belongs to the state.
Andreas Bjelland Eriksen, State Secretary of the Norwegian Ministry of Oil and Energy, rejected accusations that his country receives unjustifiably high profits due to the conflict in Ukraine. He stressed that high energy prices "damage Norway itself," and noted that gas exports to Europe increased by 8% year-on-year. "Europe sees this and understands that we are a good partner," he said.
"There are a lot of questions about how fair it is to benefit from the current situation," said Karin S. Thorburn, a professor at the Norwegian School of Economics. "They say we don't set a price."
Many Norwegians claim that they lead an environmentally friendly lifestyle, because they use clean energy for heating homes and electric cars, and sell fuel to other countries. "There is a very common idea here that the bad guys are the ones who burn fuel,“ Thornburn explained. ”They say here that "they will burn fuel anyway, they will just buy it from others.""
Meanwhile, representatives of the Norwegian oil and gas industry behave as if they have become lottery winners and are already tired of calls from relatives who, frankly, should learn how to save. Some are asking why a prudent Norway should help countries like Germany, which used to get rich at the expense of cheap oil and gas from Russia.
In private conversations, EU officials and diplomats admit that a very awkward situation has developed, since they have been demanding Norway to stop drilling in the Arctic for the whole of 2021 due to climate change, and in 2022 they are persuading it to make a discount on fuel. But the military conflict has changed the balance of power, according to one EU official who asked not to be named. To call Norway, which stands for peace and is ready to provide assistance, a country profiting from the conflict, means "stepping on a sore spot."
In Stavanger, which is the heart of Norway's oil and gas sector, the consequences of the Russian-Ukrainian conflict have completely changed the situation.
The discovery of oil in an offshore field in the late 60s turned this stretch of coast from a fishing village into a place where Elon Musk stops to make a speech, simultaneously enriching the whole country. Later, concerns about climate change called into question the future of this city. But that was before the start of the Russian-Ukrainian conflict.
"In a very short time, we have gone from mud to princes," said Kolbjorn Andreassen, communications manager at the Offshore Norge industry association in Stavanger.
"Before, no one paid attention to our role in ensuring energy security. We were considered just a source of harmful emissions," he said. "Now the Europeans have realized how much they really need us."
High demand and supply shortages have caused astronomical prices – Andreassen and other representatives of the Norwegian oil and gas industry consider this dynamic to be a natural, neutral truth of life.
"Over the past decades, I have seen both low and high prices," said Frode Leversund, executive director of the large Norwegian pipeline operator Gassco, which supplies gas to Europe. At the moment, according to Leversund, he is focused on gas supplies.
"The European Union and the European Commission complain about prices, but these are market prices," said Bjorn Vidar Leroen, an industry veteran and author of a book about the history of the Norwegian Troll gas field.
In a book published in the 90s, he tells the story of "brave minds" who discovered one of the largest gas fields in Norway and decided to develop it competently, investing most of the income in the sovereign wealth fund.
In the preface of the book, written by NATO Secretary General Jens Stoltenberg, who then held the post of Minister of Industry and Energy of Norway, it was said that strong ties between buyers and sellers, enshrined in agreements, would ensure gas supplies to Europe "for many generations to come."
But over the past 20 years, Europe has liberalized gas markets, moving from long-term contracts between buyers and sellers to spot pricing. The conflict in Ukraine provoked a rapid increase in spot prices, which led to the current crisis.
Leroyen doesn't have much sympathy for European buyers. "If they had just signed long-term contracts, the price would have been lower," he said.
He added that Europe did not rush to help Norway in 2014, when falling oil prices led to increased unemployment and labor unrest. "Did anyone in Brussels say then: What can we do to help Norway?" – says Leroyen.
But now some Norwegians would like to help.
Discussions about attempts to benefit from the military conflict go hand in hand with disputes about the role of the sovereign wealth fund and what politicians owe to Norwegian citizens.
According to the Brussels-based Bruegel think tank, the government has allocated $2.3 billion to curb electricity prices, among other things paying 90% of bills exceeding a certain price threshold.
But on the coast near Stavanger, not far from where the gas pipelines go to Europe, Ingunn Johannessen, the owner of the store in the fifth generation, is forced to turn off the freezers and worry about the coming winter.
Since 1851, the Johannessen family has owned a small general store where villagers along the fjord can buy food, fishing gear and tools. Johannessen managed to survive periods of very low profits and even a pandemic by keeping her store. But the combination of rising food and electricity prices is driving her crazy.
According to her, she, like everyone else, closely follows the course of events in Ukraine and wonders if this conflict is really the only reason for the decline that her business is currently experiencing. "You can raise prices for anything and claim that Putin is to blame for everything," she said.
According to Johannessen, local authorities receive huge profits from the nearby processing plant Gassco, and they could well help the business on which the local community rests. She wants the Norwegian Government to make more efforts to manage windfall profits wisely.
According to her, this money "should be received by those people who need it."
Ingrid Liland, deputy leader of the Norwegian Green Party, said that attempts to appeal to the kindness of Norway seem to be working, pushing the government to work more closely with Europe.
She also expected that Norwegian companies would seek to sign longer contracts that would provide companies with a predictable revenue stream, as well as allow loyal customers to fix prices below current rates. It is reported that the UK is already considering such a possibility.
However, long-term contracts can also damage Norway's climate goals. According to Leland, she hopes that the government will show solidarity with Europe without sacrificing its climate goals. "Norway has already played an important active role in conflict resolution in the past," she said. "We can take on that role again."
