The European Commission has executed a rapid change in energy policy and is now expressing strong support for offshore oil and gas E&P off Norway.
Although the EU is a major consumer of oil and gas it has over past years not encouraged further exploration and production. The EC in particular has emphasized the bloc’s intent to reach net-zero emissions in the long term.
Russia’s invasion of Ukraine and the subsequent sanctions appear to have put net zero ambitions in the back seat.
With pipeline natural gas logistically difficult to replace, there are already concerns growing about how mainland Europe will cope during the winter of 2023-24. Russian state-owned energy company Gazprom has cut gas supplies (to varying degrees) to customers in 12 EU countries, including a sharp 60% reduction in flow on the Nord Stream pipeline to Germany. The benchmark Dutch TTF natural gas futures contract is up by 300% year-on-year.
These problems mean that Norwegian natural gas which Norway has been producing at a high volume since the start of the year, is most welcome to the EC. Norway could supply an estimated 6% of annual EU imports from Russia this year alone.
The EC and Norway said in a joint statement that “the EU supports Norway’s continued exploration and investments to bring oil and gas to the European market”, noting that “Norway has significant remaining oil and gas resources and can, through continued exploration, new discoveries and field developments, continue to be a large supplier to Europe also in the longer term beyond 2030.”
The statement also noted that the relatively low emissions from Norway’s offshore sector – less than half the global average – made Norwegian oil and gas more compatible with Europe’s climate objectives than comparable supplies from elsewhere. The parties “agreed to step up cooperation in order to ensure additional short-term and long-term gas supplies from Norway”. They also agreed to work together on renewables in the long term.