As the Iran war drags on and the energy crisis deepens, Norway is strengthening its position as Europe's "alternative supplier" of oil. It is moving to absorb Europe's energy demand by touting its relative freedom from geopolitical risk.
On the 14th, The New York Times (NYT) said, "The current Iran war is threatening global oil supplies and sending prices soaring," adding, "The crisis has once again exposed Europe's energy vulnerability, and it has put Norway in a position to be judged on whether it can expand its role as a reliable and friendly energy source within Europe."
Norway is Western Europe's largest oil producer, exporting 95% of the oil it produces and nearly all of its natural gas to the European Union (EU) and the United Kingdom. Europe's dependence on Norwegian oil is about 30%. Norway's oil production is about 2 million barrels a day, ranking 12th in the world.
In particular, unlike other major oil producers, being relatively free from geopolitical risk is cited as a strength. Thanks to this stability, the more the global energy market becomes volatile, the faster demand for Norwegian oil is rising.
In fact, Norway has reaped large revenue from energy exports in every major wartime phase. It also made massive profits during the Russia-Ukraine war, and in the second year of the war, it posted more than $100 million (about 147 billion won) in additional revenue from the energy industry alone. Since the Iran war broke out, demand has continued to rise, and it has been tallied to have generated about $5 billion (about 7 trillion won) in additional revenue, with expectations that revenue will grow further.
Amid such expectations, shares of Norway's state-owned energy corporations Equinor and Var Energi have surged to a record high. Robert Næss, chief investment officer at Nordic bank Nordea, called it "the best first quarter since 1989." He said Norway is earning about $185 million (about 270 billion won) a day in additional revenue from oil and gas, and projected that if the war continues, an additional $6 billion (about 9 trillion won) in revenue will be generated.
Norway produces 98% of its electricity from renewable energy and ranks among the world leaders in electric vehicle adoption, keeping domestic oil consumption low. Accordingly, it is pursuing a strategy to expand oil production and increase exports based on a structure with low dependence on domestic demand. On the 11th, Norway's largest oil corporations Equinor announced that it had begun drilling for natural gas off Brazil's coast.
However, there are concerns about whether Norway can establish itself as a stable alternative oil supplier. Norway's drilling facilities are already running at full capacity, and expanding into the Arctic is inevitable to increase production. This is drawing opposition from environmental groups.
There is also criticism that its image as the country that awards the Nobel Peace Prize and as a mediator of peace conflicts with the reality of earning oil revenue from war. However, this perception is gradually changing, the NYT said.
Guillaume Delabi of investment advisory firm Bernstein said, "Whichever way it unfolds, the Middle East is likely no longer to be seen as a safe oil market."