Norwegian Gas: A Way out of the Supply Bind, or a Pipe Dream?
By K. A. Dhananjay, Policy Brief Writer
Russia’s invasion of Ukraine is one of the greatest crises that Europe has witnessed in living memory. While national security has been pushed to the top of the agenda, Europe’s dependence on Russia for a large portion of its natural gas imports means energy security cannot be overlooked. Europe — already in the midst of an energy crisis before the war — has experienced soaring prices, turning a bad situation far worse.
In light of the invasion, the EU has made extensive efforts to strengthen its energy security by diversifying away from Russia. With Norway being the second-largest exporter of gas to Europe, this unsuspecting state could play a key role in the EU’s endeavour. At a bilateral EU-Norway summit in February, for instance, the two sides agreed on increased exports of Norwegian gas to Europe. The EU has also pursued alternative gas supplies from countries such as Algeria, Azerbaijan, the UK, and Qatar.
One major hurdle on the road to energy security, however, is that Norway is already nearing full production capacity. This would mean that the EU would still have to source gas from Russia until existing contracts expire. Furthermore, existing Norwegian gas connections with Europe pipelines are largely directed towards Western Europe, and even the Baltic Pipe (which is currently under construction) only services Poland and the Baltic states.
Time is also a major factor that cannot be overlooked. The construction of new gas infrastructure requires extensive negotiations with transit countries on matters such as permit grants, technology transfers, and R&D investment.
But partnering with Norway makes sense from more than just an energy security-perspective. While Norway is a major gas and oil exporter, it also sources over 75 percent of its electricity from solar, wind, and hydroelectric power. An energy partnership with Norway therefore represents a key opportunity for the EU to secure energy supplies while promoting the green transition. At the bilateral summit in February, the two sides spoke not only of gas, but also suggested the establishment of a ‘Green Alliance’ in order to promote cooperation in the renewable energy sector.
The greatest challenge in reducing dependence on Russian gas will present itself in the medium term — that is, by next winter. This is because as we are approaching summer, gas consumption and demand will fall, but the EU’s decarbonisation drive will not fully bear fruit before consumption rises again as temperatures fall again. The situation remains fluid, however, and there’s little way of telling what the energy landscape will look like even in the near term. Russia’s most recent demand that EU countries conduct their gas and oil transactions with Russia using rubles might leave Brussels little choice but to pursue its green energy transition at an even faster pace. Either way, what is clear is that the coming months will put the EU’s unity and willingness to endure economic pain over its support for Ukraine to the test.
