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Norway’s economy pumping up again

Norway was wallowing in good energy-related news on Tuesday that’s expected to further fuel its economic recovery. The country stands to gain from a recent rise in oil prices, more gas exports to Germany and even reports of climate researchers’ new calculations suggesting the planet has more time to cut carbon emissions.

Oil & Energy Minister Terje Søviknes is pleased by the rise in oil prices, prospects for more gas exports and possibly less pressure to cut carbon emissions. PHOTO: Fremskrittspartiet

“It’s fantastic to hear even the Greens Party saying that there’s now more uncertainty around the calculations and effects of carbon emissions,” Norway’s Oil & Energy Minister Terje Søviknes of the pro-oil Progess Party said on the national radio program Politisk kvarter Tuesday morning. “That means we can approach the issue a bit differently, and have a more balanced debate.”

Søviknes was referring to a report in the magazine Nature Geoscience entitled “Emissions budgets and pathways consistent with limiting global warming to 1.5 degrees centigrade.” It contains updated caculations suggesting that the world’s carbon budget now amounts to 20 years at current levels, longer than earlier predicted. The 1.5 degree cap is not impossible, but still represents a major political challenge.

Easing the pressure to cut emissions
For Norway, that can ease some of the pressure on cutting emissions in a country fueled by its oil and gas industry. “We must realize that the world needs more energy, and that using gas instead of coal is the most important, quickest and most cost-efficient thing we can do to cut emissions,” Søviknes said. He sees ongoing demand for Norway’s oil and gas, and thus remains bullish on both production and exploration on the Norwegian Continental Shelf.

He and several economists in Norway were also buoyed by the recent rise in prices for Norway’s North Sea crude oil. They’re now approaching USD 60 per barrel, the highest level in two years. The price is still around half their peak prior to the oil collapse in 2014, but massive cost-cutting in the oil industry has made lots of production profitable at a price much lower than USD 60. That can help revive the country’s still-important oil industry, even as economic diversification efforts continue to make Norway less reliant on it.

The oil price rise has been linked to global unrest not least in the Middle East, where the vast majority of Kurds also voted this week to create their own country of Kurdistan. That fuels more uncertainty over oil supplies from Northern Iraq, which could become part of Kurdistan. It also creates uncertainty, however, for Oslo-based oil company DNO, which has large oil-field interests in the region. It owns 75 percent of the Tawke field, for example, and analyst Trond Omdal told newspaper Dagens Næringsliv (DN) on Tuesday that DNO’s interests in the Kurdish area have weakened its share price over the past week.

More gas exports to Germany
Meanwhile, reports that Germany is likely to buy more gas from Norway were also grabbing airtime Tuesday morning. Germany’s new coalition government is keen to prod along the transition from coal to gas as a key energy source, and as a means of reducing German emissions. A boost in gas exports to Germany thus provided more good news for Søviknes and the economy.

The Greens Party, which hung on to its seat in Norway’s Parliament after the September 11 election, continues to call for a halt to all new oil and gas field licensing for exploration and production, and it wants to phase out Norway’s oil and gas industry. Une Bastholm, the Greens’ new Member of Parliament succeeding Rasmus Hansson, still argues that there’s no doubt carbon emissions contribute to climate change. Even though the planet may have more time to cut them, Bastholm claims that it’s crucial for Norway to remain vigilant about doing so.

“There are many who are glad about the results in the report (from the climate researchers),” Bastholm said on state broadcaster NRK’s Politisk kvarter radio program. “It gives us hope that it will be possible to reach the (carbon emission) goals, but we still need to react quickly. Around 15- to 20 years is still the time it will take to phase out emissions, as long as we don’t open new oil fields.” Berglund



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