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Norway’s political tussle over new gas supplies

Norway is vowing to help Europe turn away from Russian gas, but that’s set off a political battle with the left-wing opposition that rejects expanded gas exploration.

EU countries have promised to wean themselves off Russian gas supplies “before 2030” and pressure is growing to target Russia’s gas exports in a future round of sanctions against Moscow.

That would leave a huge gap to fill: In 2021, the EU imported 155 billion cubic meters (bcm) of Russian gas, accounting for about 40 percent of consumption. The bloc is aiming to boost green power as fast as possible, but it will also have to find other sources of gas.

EU leaders are hunting for more gas in Central Asia, the Middle East and Africa, but the nearest and least politically problematic supplier is Norway. An early sign of that is the Baltic Pipe linking Poland with Norway’s North Sea gas fields that will replace the 10 bcm of gas that Poland used to get from Russia — a flow that Russia’s Gazprom ended last month.

For Norway, the world’s third-largest gas exporter, that creates an opportunity.

A short-term boost to gas extraction looked like a win-win for Norway, lining state coffers while also allowing the government to argue it is helping cripple the Kremlin’s war machine.

But the center-left government, with backing from right-of-center opposition parties, also argued that it will have to expand drilling into virgin seabeds to meet increased demand.

That’s an unjustifiable attempt to use the war in Ukraine to promote more fossil fuel extraction, said Lars Haltbrekken, energy and climate spokesperson for the opposition Socialist Left Party. His party walked out of coalition talks with other left-wing parties following last year’s election over its refusal to continue Norway’s oil and gas drilling.

By the time those new supplies are available — in 15 to 20 years, according to Haltbrekken — many countries would have moved to renewables and away from fossil fuels. “Looking for more gas would be a strategic and environmental mistake.”

The clash with Haltbrekken’s party is likely to slow — or even block — the government’s emerging plans for new gas wells in previously untapped Norwegian subsea zones in places like the Barents Sea. The minority government relies on the tacit support of the Socialist Left’s 13 MPs to get its budgets through parliament.

For Europe, the political friction in Norway is an early sign that efforts to end its reliance on Russian gas — and find other sources of supply — may be even more difficult than anticipated. 

Norway’s Deputy Petroleum and Energy Minister Amund Vik insisted Norway remains a reliable partner and can play a key role in Europe’s reworked energy system.

“For the longer term, we see that even with the increased pace of the energy transition in Europe, the fact that they will try to do without Russian gas and oil creates a gap that will remain for a long time,” Vik told POLITICO. “So, it means that it is important for us to find new fields and develop them, especially for gas, to secure a somewhat less bumpy ride in Europe’s energy transition than it would appear to be now.”

Supply squeeze

There are practical challenges to ramping up supply to Europe, as Norway’s gas fields are already at maximum production capacity.

Last year, Norwegian gas met a quarter of Europe’s consumption needs, with national pipeline operator Gassco saying it delivered 113.2 bcm.

In March, the government authorized a production increase of at least 1.4 bcm, mainly from the Oseberg and Heidrun fields, according to Norwegian energy company Equinor.

Production will get a boost from the northern Hammerfest liquefied natural gas facility, which serves the Snøhvit gas field and is set to restart operations this month following a shutdown in 2020. Its reopening will add 5 bcm to 7 bcm of production.

Nikoline Bromander, an analyst with Oslo-based consultancy Rystad Energy, forecasts that Norway will boost overall production this year to 126.5 bcm.

But there’s concern that those higher volumes can’t be sustained.

Production is affected by routine shutdowns for maintenance, for one. Some of Norway’s gas fields — including the massive Troll field under the North Sea — are also expected to enter a period of decline in the next decade.

That means even if the government were to approve new exploration and make significant finds, those would be unlikely to quickly make up for the fall in output from current wells.

“It will be challenging to increase gas production from Norway in any significant way in the next few years, as Norway does not have the infrastructure or the gas assets to support it,” said Helge André Martinsen, an oil and gas market analyst at Oslo-based DNB bank. 

The political blowback is putting the oil and gas industry under further pressure.

Last year, the Socialist Left Party managed to secure an agreement with the government that some forms of new exploration would be postponed until at least 2023. Haltbrekken is now preparing to step up his campaign to extend and expand that deal, arguing that the country needs to focus more on renewable projects like offshore wind and making existing energy systems more efficient. 

“For 50 years, Norway has exported oil and gas, and thus contributed to enormous global greenhouse gas emissions,” the Socialist Left’s party program says. “Norway has a historical responsibility to both cut emissions in Norway, and contribute to emission reductions internationally — one of the most important measures is to stop looking for more new oil and gas.”

While the party’s position will likely fall well short of majority support in the 169-member parliament — the two government parties and two largest right-of-center opposition parties support new drilling — the Socialist Left can expect vocal backing from the small Green Party, which has three MPs.

Norway’s myriad environmentalist groups, whose recent protests have closed a coastal oil terminal and main roads in the capital, are also likely to get behind him.

“We’ll keep fighting,” Haltbrekken said. 

This article is part of POLITICO Pro

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