Norway and EU сlash over Arctic oil and gas

Norway and EU сlash over Arctic oil and gas

Norway's proposal to offer new upstream exploration licenses — mostly above the Arctic Circle — may be welcome news for European nations that are keen to end their past dependence on Russian gas. But the move has also drawn attention to a spat between Norway and the EU over the European Commission's updated Arctic policy objectives, which include stopping the development of new oil and gas resources in the region.

As Energy Intelligence writes, Norway's energy ministry announced plans this week to offer 92 new offshore blocks in its next "awards in pre-defined areas" (APA) bid round — 78 blocks in the southern Barents Sea and 14 in the Norwegian Sea. "Facilitating new discoveries in the north is important both for Europe, the country and the region," Petroleum and Energy Minister Terje Aasland said this week. “We shall continue responsible and long-term management of the oil and gas resources. Continuing the annual licensing rounds is a pillar of our petroleum policy,” he added.

Conflicting Goals

The announcement has raised the hackles of climate campaigners, who argue that the new bid round includes areas in the Barents "ice edge zone" and will lock in long-term oil and gas production beyond 2050. Environmentalists also say that Norway's push to exploit its Arctic hydrocarbon resources puts it at odds with the EU's Arctic Policy goals. In October 2021, the European Commission set out its plans for greater engagement in the Arctic as part of its efforts to rein in emissions of planet-warming greenhouse gases. That includes working with non-EU partners like Norway toward a "multilateral legal obligation" to halt new oil and gas development in the Arctic "or contiguous regions" and to stop importing hydrocarbons produced there.

"In the current energy crisis the European Commission and several EU member states have stated clearly that they depend on Norway as a supplier of gas to Europe in the short-to-medium term," Benedicte Solaas, head of climate and environment at Norwegian industry group Offshore Norge, told Energy Intelligence. "Thus, the goal of the EU's Arctic policy does currently not seem to be transformed into political action in the EU," he added. Solaas stressed that "any phaseout of petroleum activities should be governed by the market — and there is no sign of that at the moment — or by national Norwegian politics, and there is only limited political intention to do that at the moment."

Green Alliance on hold

However, Norwegian non-governmental organization Bellona said recently that the EU's position on Arctic oil and gas has already led to an impasse in negotiations with Norway that were intended to result in a "green industrial alliance." The proposed alliance was supposed to support the development of green technologies and markets in Norway to help speed up its energy transition. "This was originally scheduled to be signed during this year's COP27 climate summit. The reason: Norway and the EU do not agree on what the agreement should say about oil and gas activities in the Arctic," Bellona said. "Failure to conclude such an agreement would be to the detriment of future-oriented industries in Norway, like offshore wind and batteries," it added.

According to Bellona, Norway wants to see language in the draft agreement that supports Norwegian oil activity in the Arctic after 2030, which the EU rejects.

The EU wants Norway to agree that Arctic oil and gas should remain in the ground in line with its policy objectives, but Oslo has rejected this. "We are still discussing with the Norwegians. Norway is a friend, a neighbor, an ally, and a partner with high climate ambitions, hence our ambition to reflect this in a green alliance," an EU spokesperson told Energy Intelligence. But the spokesperson — citing the EU Green Deal, EU climate law and the Paris Agreement — added that "the objective for oil, coal and gas to stay in the ground in the vulnerable Arctic remains important from a climate change perspective." "We will continue to work towards such a moratorium with all countries," the spokesperson added.