Caspian Energy (CE): Mr. Freiberg, the number of Norwegian companies abandoning an oil-gas business in favour of industrial production and innovations is getting more and more. In particular, Norsk Hydro, Equinor are cutting oil production. Does it mean that the oil-gas sector is not a priority for the Norwegian economy anymore? What’s in store for Europe in this case?
Kjell-Børge Freiberg, Member of the Norwegian Parliament, former Minister of Petroleum and Energy of Norway: The oil and gas sector is by far Norway’s largest measured in terms of value added, government revenues, investments and export value. The sector therefore plays a vital role in the Norwegian economy and the financing of the Norwegian welfare state. The activity level on the Norwegian continental shelf is expected to increase in the years to come. The operators and the service and supply industry have managed to reduce costs and increase efficiency over the last few years, resulting in profitable projects even at low oil prices. Norway continues to lead an active exploration policy. We have made significant acreage available for exploration and we are encouraged by the interest shown by the industry to continue to explore on the Norwegian shelf. We are seeing exciting new oil and gas projects on the Norwegian Continental Shelf. For example, in October of 2019 the oil field Johan Sverdrup was brought on stream. It is the third largest oil field ever on the Norwegian Continental Shelf.
CE: Norway is not an EU member but is a main supplier of energy resources to the markets of Great Britain, the Netherlands and the Baltic states. How will Brexit impact the supplies? Will the prices for energy resources increase in the EU and Great Britain, thereby lowering industrial competitiveness of these countries?
Kjell-Børge Freiberg: The UK is one of Norway’s largest trading partners. The UK is our main export market and oil and gas are of course the main exports. Norway will continue to be a close trading partner with the UK and remain a major supplier of oil and gas to the UK, also in the future. Norway attaches great importance to ensuring long-term secure supplies of oil and natural gas to our friends in Europe and will be an important source of oil and gas for Europe for the long term. There are substantial oil and gas resources remaining on the Norwegian Continental Shelf.
CE: Why has the Government given up the national plan on wind energy development in 13 regions? How do windmills affect onshore and offshore fauna?
Kjell-Børge Freiberg: In Norway, there is a large public debate on wind power onshore. The arguments against wind power are mostly due to the consequences for the environment and landscape. Several wind power projects are under construction. The Ministry proposed a tool to control where to build new wind power projects onshore – a national framework for wind power. After a public consultation, the government decided not to designate specific areas as suitable for wind power production. The government is now in process to further develop the licensing system i.a. to improve local acceptance and to deal with environmental issues. As part of this process, the knowledge base has been considerably improved. When establishing wind power plants, birds are in particularly prone to collision and disturbance. Other challenges onshore are related to landscape, outdoor life, noise, reindeer husbandry and biodiversity more generally.
CE: Does Norway benefit from the European Commission’s control (regulation) over the domestic market or it is a free market which is seen as a priority? To what extent do LNG supplies from the USA and Canada sound promising?
Kjell-Børge Freiberg: Norway is not dependent on gas imports. We use very little gas domestically and almost all of Norway’s gas output is exported. This is why we are the third largest exporter of gas in the world. Most of Norway’s gas is exported to Europe via pipeline, but we also have one LNG-plant in the high north which can supply a global market. Norway is Europe’s second largest supplier of gas, and last year our gas covered about one quarter of the gas demand in the EU.
Norway supports competitive energy markets with efficient pricing of greenhouse gas emissions.
CE: Do you consider the Southern Gas Corridor as your competitor, such as Gazprom for instance? What is the way of competition which shall be in the European market? Do you consider the EU’s gas market monopolization (by any side) as a problem? How is this problem addressed in Norway?
Kjell-Børge Freiberg: Establishing an efficient gas market supported with enough infrastructure is, in my view, the best way to secure security of supplies. Europe has done much to create such a market over the last decades. The European gas network has been strengthened with the expansion of gas infrastructure such as new storage capacities, new pipeline interconnections and new LNG import facilities. The EU has also added new gas market regulations aimed at greater monitoring, coordination and cooperation and this has improved security of supply, preparedness and transparency in the European gas market. European gas consumers have never had more sources of gas supply than they have now. Norwegian gas has been and will for a long time be one of the most important of these.
CE: How will the climate change affect the energy security of Norway and energy security of its partners?
Kjell-Børge Freiberg: The Norwegian electricity production is based on hydropower which can be stored in reservoirs, and is almost 100 percent renewable. Thus, we do not currently face the challenges of intermittency in our electricity sector. In many years, Norway is a net exporter of renewable electricity. Electricity is widely used in many sectors – such as transport, industry and households. Natural gas has a key role to play in both energy security and the energy transition. Stable access to reliable and affordable energy is key to both social and economic development. People and businesses depend on gas every day. Gas is inexpensive, available and enables emission cuts from energy use, without compromising security of supply.
Gas is therefore an important part of the world’s and Europe’s energy mix today – and going forward. Gas has a lot to offer in the transition to a low carbon energy system. By replacing coal, natural gas can significantly reduce emissions with near immediate effect. By being a flexible partner for intermittent renewable energy, natural gas can enable the growth in wind and solar power. In the longer term, natural gas can be decarbonised, for example by conversion to hydrogen with carbon capture and storage.
CE: Which incentives are introduced in Norway to develop energy efficient technologies, renewable energy sector and energy saving?
Kjell-Børge Freiberg: The Norwegian government is committed to support research and development in the energy industries and we do this in different ways. We have specific research programmes covering all stages of innovation, from basic research to projects that are close to market introduction. We are also funding research centres that conduct long-term research of high international calibre in order to solve specific challenges in the energy sector. Additionally, we have a tax incentive scheme designed to stimulate research and development as well as a venture fund called “Nysnø” that is set up to invest in promising companies that provide smart and potentially profitable solutions to the challenges of climate change.
Thank you for the interview
