The war made Norway’s oil and gas profits soar.Now it’s urged to help

Stavanger, Norway (AP) — Europe’s frenzied search for energy alternatives to Russia has dramatically increased demand and prices for Norwegian oil and gas.

Europe’s second-largest gas supplier is resisting accusations it profited from the Ukraine war as the money poured in.

Polish Prime Minister Mateusz Morawiecki is looking for a Scandinavian country to replace some of the gas Poland has received from Russia in the past, saying Norway’s “huge” oil and gas profits “indirectly prey on the war”. He urged Norway to use the windfall to support the worst-hit countries, mainly Ukraine.

Last week’s comments touched a nerve, although some Norwegians wondered whether their boost to industry, power generation and fuel vehicles by boosting economic aid to Ukraine and helping neighbors end their reliance on Russian energy would be enough to fight Russia’s war .

Taxes on the windfall profits of oil and gas companies are common in Europe to help people cope with soaring energy bills, and now the war has exacerbated the situation. Both Spain and Italy have approved them, while the UK government plans to introduce one. Morawiecki asked Norway to send further oil and profits to other countries.

Norway, one of the richest countries in Europe, spends 1.09 percent of its national income on overseas development — one of the highest in the world — including more than $200 million in aid to Ukraine. As oil and gas coffers swell, some want to see more funding earmarked for mitigating the effects of the war — not slashed from funding for institutions that support people elsewhere.

“Norway has slashed most UN agencies and support for human rights projects to finance the cost of taking Ukrainian refugees,” said Berritt Lindemann, policy director at the Norwegian Helsinki Commission for Human Rights.

She helped organize Wednesday’s protest outside parliament in Oslo, criticizing the government’s priorities and saying there was “some truth” to Poland’s rhetoric.

“It looks really ugly when we know revenue has skyrocketed this year,” Lindeman said.

Oil and gas prices are already high due to the energy crunch and are soaring due to the war. Natural gas is trading at three to four times what it was at the same time last year. Brent, the international benchmark, topped $100 a barrel after the invasion three months ago, and has rarely broken below it since.

State-controlled Norwegian energy giant Equinor’s first-quarter revenue quadrupled from a year earlier.

The bounty prompted the government to revise its forecast for oil activity revenue this year to NOK 933 billion ($97 billion), more than triple the 2021 revenue. Much of the money will flow into Norway’s vast sovereign wealth fund – the world’s largest – to support the country as oil runs dry. The government is not considering moving it elsewhere.

Norway “has provided Ukraine with substantial support since the first week of the war, and we are preparing to do more,” Secretary of State Evind Wade Petersen said in an email.

He said the country had provided financial support, weapons and more than 2 billion crowns of humanitarian aid “independently of oil and gas prices”.

Meanwhile, European countries scrambled to diversify supply away from Russia, pushing up energy prices in Norway. They are accused of helping finance the war by continuing to pay for Russian fossil fuels.

This energy dependence “gives Russia a tool to intimidate and use against us,” former Norwegian prime minister and NATO secretary general Jens Stoltenberg told a World Economic Forum meeting in Davos, Switzerland. And this has now been clearly demonstrated.” .

Russia has stopped gas supplies to Finland, Poland and Bulgaria, citing refusal to pay in rubles.

The 27 EU countries aim to reduce their reliance on Russian gas by two-thirds by the end of the year through conservation, renewable development and alternative supplies.

Europe is pleading with Norway and countries such as Qatar and Algeria to help address the shortage. Norway supplies 20 to 25 percent of Europe’s natural gas, compared with 40 percent in pre-war Russia.

“It is very important for Norway to be a stable, long-term supplier of oil and gas to the European market,” said Deputy Energy Minister Almond Vik. But companies are selling in a volatile energy market with “high oil and gas prices since last fall, and these companies are producing close to the maximum output their fields can deliver on a daily basis,” he said.

Even so, Oslo has responded to Europe’s call for more gas by offering operators licenses to produce more gas this year. Tax incentives mean the companies are investing in new offshore projects, with a new pipeline to Poland opening this fall.

“In difficult times, we are doing everything we can to be a reliable gas and energy supplier to Europe. The market was in short supply last autumn and it is even more urgent now,” said Equinor spokesperson Ola Morten Aanestad.

The situation is a far cry from June 2020, when prices plummeted in the wake of the COVID-19 pandemic and Norway’s former government issued tax breaks for oil companies to stimulate investment and protect jobs.

Combined with high energy prices, incentives expiring at the end of the year have prompted companies in Norway to release development plans for a slew of new oil and gas projects.

However, these projects will not produce oil and gas until later in the century or even further into the future, when the political situation may be different and many European countries want to shift most of their energy use to renewables.

By then, Norway may face a more familiar criticism — that it is contributing to climate change.

Copyright © 2022 The Washington Times, LLC.



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