Norway's Offshore Regulator Worried Over European Energy Security

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--In response to calls to phase out oil and gas activity, Norway's offshore regulator said doing so would create risks to European energy security.

Monday marked the last day for comments to an October report from Norway's climate change committee that said the government should start getting ready for "the final phase" of its petroleum activities.

Those recommendations mirrored calls made by the International Energy Agency (IEA) (Paris, France) in 2021. IEA Executive Director Fatih Birol said at the time that "there can be no new investments in oil, gas and coal" if global temperatures are to remain in check.

Norway's economy is unique. It relies on hydroelectric power to meet its inland energy needs, but is among the region's largest oil and gas producers. In commenting on the climate panel's recommendations, Torger Stordal, the director-general of the Norwegian Offshore Directorate, said regional energy security would be threatened without Norway.

"Without Norwegian gas, it would have been more difficult to cover Europe's demand for gas, and the price of energy would have been higher for all Europeans," he said.

Before the Russian invasion of Ukraine in 2022, Russia was a primary supplier of both crude oil and natural gas to the European economies. Western sanctions severely limit how much of the Russian supplies can reach the market, leaving alternate suppliers such as the United States and Norway to fill the void.

Stordal's office said Norwegian gas exports to Europe increased by about 100 terawatt-hours after the invasion, or "the equivalent of about 65% of all Norwegian power generation that year."

What's more, the void filled by rival suppliers helped offset the sharp spike in natural gas prices that immediately followed the Russian invasion. The Dutch Title Transfer Facility, a regional index for the price of natural gas, is down some 92% since the invasion. With gas now in ample supply, and with a mild heating season in the Northern Hemisphere, prices are down more than 20% since the start of the year.

Geopolitical issues aside, the climate panel called for a halt to upstream activity until the government outlines its "final phase" for the sector. The offshore directorate, however, said the panel did not address the impact on employment and revenues.

"Time-critical and profitable oil and gas resources could be lost and existing infrastructure will be shut down earlier than planned," it added.

Elsewhere, the directorate said oil and gas production should decline on its own, after reaching a peak in 2025.

"The production decline towards 2050 is within what the Intergovernmental Panel on Climate Change and the IEA have projected is in line with successfully following up the Paris Agreement," it said.

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