War surges Norway’s oil, gas profit. Now, it’s urged to help

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Europe’s frantic search for an alternative to Russian energy has dramatically increased the demand and price of Norway’s oil and gas.

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As money pours in, Europe’s second-largest natural gas supplier is facing charges of profiting from a war in Ukraine.

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Polish Prime Minister Mateusz Morwiecki, who is looking to the Scandinavian country to replace some of the gas Poland is getting from Russia, said Norway’s “huge” oil and gas gains are “indirectly a victim of war.” He urged Norway to use that windfall advantage to support the hardest-hit countries, mainly Ukraine.

Last week’s comments touched a nerve, even as some Norwegians wonder whether they would like to increase economic aid to Ukraine and encourage neighboring countries to end their reliance on Russian energy for the power industry, including electricity and fuel. By helping to generate vehicles the Russians are doing enough to combat the war.

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Taxes on windfall profits from oil and gas companies have become common in Europe to help people cope with rising energy bills, now exacerbated by war. Spain and Italy both approved them, while the government of the United Kingdom plans to introduce one. Moraviki is asking Norway to go further by sending oil and profits to other countries.

Norway, one of Europe’s wealthiest countries, committed 1.09% of its national income to foreign development – one of the highest percentages worldwide – including more than $200 million in aid to Ukraine.

With oil and gas coffers bulging, some would like to see even more funding to ease the effects of the war – and not skimmed by money for agencies that support people elsewhere.

“Norway has made dramatic cuts to most UN institutions and support for human rights projects to finance the cost of receiving Ukrainian refugees,” said Berit Lindemann, policy director of the Norwegian Helsinki Committee’s human rights group.

He helped organize a protest outside parliament in Oslo on Wednesday, criticizing government priorities and saying the Polish remarks had “some merit”.

“It looks really ugly when we know that earnings have skyrocketed this year,” Lindemann said.

Oil and gas prices were already high amid energy shortages and have risen because of the war.

Natural gas is trading at three to four times the same period last year. International benchmark Brent crude oil burst through $100 a barrel after the attack three months ago and has rarely dropped below that since.

Norwegian energy giant Equinor, which is state-owned, posted earnings four times higher in the first quarter than in the same period last year.

The bounty led the government to revise its forecast for income from petroleum activities this year to 933 billion Norwegian kroner ($97 billion) – more than three times that earned in 2021.

The vast bulk of it will be funneled into Norway’s vast sovereign wealth fund – the world’s largest – to support the nation when the oil dries up. The government is not contemplating to divert it elsewhere.

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

He said the country had sent financial aid, weapons and more than 2 billion kronor in humanitarian aid “independent of oil and gas prices”.

Meanwhile, European countries have helped push up Norwegian energy prices by scrambling to diversify their supplies away from Russia. He has been accused of helping the war by continuing to pay for Russian fossil fuels.

NATO Secretary-General Jens Stoltenberg, the former Prime Minister of Norway, told the World Economic Forum meeting in Davos, Switzerland, that energy dependence “provides a tool to intimidate Russia and use it against us, and this is now clearly demonstrated.” Has been done.” ,

Russia withheld natural gas to deny Finland, Poland and Bulgaria a demand to pay in rubles.

The 27-nation EU aims to reduce dependence on Russian natural gas by two-thirds by the end of the year through conservation, renewable development and alternative supplies.

Europe is asking for help from Norway along with countries like Qatar and Algeria to fill this shortfall. Norway distributes 20% to 25% of Europe’s natural gas, compared to 40% of Russia’s before the war.

It is important for Norway to be “a stable, long-term provider of oil and gas to European markets”, said Deputy Energy Minister Amund Vik. But companies are selling in volatile energy markets, and “with the high oil and gas prices seen since the last fall, companies have daily produced what their region can produce to the maximum,” he said.

Nevertheless, Oslo has answered the European call for more gas this year by granting permits to operators to produce more gas. Tax incentives mean companies are investing in new offshore projects, with a new pipeline to Poland opening this fall.

“We are doing everything we can to become a reliable supplier of gas and energy to Europe in difficult times. It was a tight market last fall and there is even more pressure now,” said Equinor spokesperson Ola Morten Anstedt. .

The situation is a far cry from June 2020, when prices crashed in the wake of the COVID-19 pandemic and Norway’s previous government issued tax incentives to oil companies to increase investment and protect jobs.

Incentives due to expire at the end of the year, along with higher energy prices, have prompted companies in Norway to release a number of development plans for new oil and gas projects.

Yet those projects will not produce oil and gas until the end of this decade or even further into the future, when the political situation may be different and many European countries are hoping to shift most of their energy use to renewable energy. .

Until then, Norway may be facing the more familiar criticism – that it is contributing to climate change.

Credit: www.marketwatch.com /

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