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Norway’s Top Energy Exec Warns EU’s Supply Crunch Won’t Be Solved With Price Caps

Norway’s Top Energy Exec Warns EU’s Supply Crunch Won’t Be Solved With Price Caps

EU energy commissioner Kadri Simson said Wednesday that natural gas price caps could limit excessive price spikes but only if countries give Brussels the power to impose such a measure. Norway’s top energy firm responded to the proposal in an interview with Bloomberg on Friday, saying price caps won’t solve Europe’s supply crunch.

Earlier this week, Simson, the bloc’s energy chief, said a NatGas price cap would limit price spikes this winter. The official said the measure would be a “last resort measure” if prices uncontrollably soared.

“This Dutch TTF gas benchmark cap, we can introduce this winter already if we get the mandate,” Simson told a committee of EU lawmakers.

Responding to the EU mulling over the idea of a price cap on wholesale NatGas, Equinor Chief Executive Officer Anders Opedal told Bloomberg:

“Any price cap is not really solving the fundamental problems. 

“In fact, it can be counterproductive increasing demand while supply is not increasing.” 

Since the war in Ukraine and dwindling Russian NatGas supplies to Europe, Norway has displaced Russia as the top NatGas supplier. Rejiggering energy supply chains away from Russia will mean the EU must increase investments in the grid — though price caps deter such investments by energy firms.

And it’s not just investments. Price caps can also cause demand for NatGas to artificially rise or leave some countries struggling to attract supply from global markets. These measures, if implemented, could cause undesirable disruptions to global energy markets.

For Europe, there is good news (for now). Temperatures are expected to be warmer than normal through at least mid-November. Also, NatGas storage in the EU is 91% full despite reduced NatGas flows.

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Norway Considers Limiting Electricity Exports To Prevent Domestic Crunch

Norway Considers Limiting Electricity Exports To Prevent Domestic Crunch

Norway may soon introduce a rule to reduce its vast electricity exports if levels at reservoirs for hydropower generation drop to critically low levels in a bid to prevent power shortages and further rises in energy bills domestically.

Norway’s Energy Minister Terje Aasland told Norwegian media, as quoted by Bloomberg, that the government could introduce limits on electricity exports if the water in reservoirs drops to “very low” levels.

A cut in Norwegian power exports would be felt in Northwest Europe, which itself is grappling with issues at coal and nuclear power generating plants due to the low water level in rivers limiting coal supply via barges and warm river water unsuitable for cooling nuclear reactors.

As a result of these issues and the uncertainty over natural gas supply from Russia, power prices in Germany for the year ahead jumped to a record on Friday.

This summer’s dry weather across Europe has affected Norwegian hydropower, which accounts for 90% of Norwegian power generation. The remaining around 10% of the electricity supply in Norway comes from wind power.

While Europe scrambles to procure natural gas for winter power generation and heating, Western Europe’s biggest oil and gas producer, Norway, has a whole different power problem this summer—dry weather, which depletes water reservoirs for hydropower.

Although Norway doesn’t use gas for power generation, Europe’s gas and energy crisis is felt there, too. In recent weeks, hydropower producers have been discouraged from tapping more water for hydropower generation to save water for the winter. Operators were also asked not to export too much electricity to the rest of Europe as reservoirs are not as full as in previous years, and not to rely on imports from Europe, which is struggling with energy supply. Some Norwegian utilities, including top electricity producer Statkraft, have followed the plea from transmission system operator Statnet not to produce too much electricity now.

 

Norwegian Strikes Could Sever NatGas Supplies To UK 

Norwegian Strikes Could Sever NatGas Supplies To UK 

The European energy crunch is set to worsen this week after Norwegian offshore oil and gas workers went on strike, threatening to sever the Scandinavian country’s energy supplies to the UK and Europe, according to Reuters.

As much as 1,117,000 barrels of oil equivalent, or 56% of daily natural gas exports, while 341,000 barrels of oil would be lost by Saturday if strikes continue closing down fields, the Norwegian Oil and Gas (NOG) employer’s lobby warned.

“The strike has begun,” Audun Ingvartsen, the leader of Norway’s oil workers’ union, Lederne, said in an interview. He added the strike would escalate as workers pressure oil/gas companies to increase wages and benefits amid the worse inflation in Europe in decades.

Norway is Europe’s second-largest energy supplier after Russia. The timing of strikes comes as European countries rush to inject NatGas supplies into storage ahead of the winter, and Russian energy giant Gazprom significantly reduced Nord Stream flows to Europe. Gazprom plans to halt Nord Stream flows for routine maintenance from July 11 for ten days.

Norway’s Gassco, a state-owned pipeline operator, explained to Financial Times“in a worst-case scenario, deliveries to the UK could stop totally.” 

“The UK has also become a key conduit for moving supplies on to Europe over the summer, with its export pipelines to Belgium and the Netherlands running at speed to send excess imports of liquefied natural gas and Norwegian supplies into continental storage ahead of the winter,” FT said.

News of the strikes sent British wholesale NatGas price for day-ahead delivery up 16%.

Strikes began on Monday and knocked offline 89,000 barrels of oil equivalent a day of production at three fields on Norway’s continental shelf. Three more fields could be closed by Wednesday, affecting even more production. If the labor union and energy companies don’t come to a resolution on wages, a total of 14 sites could be offline by Saturday, representing a 56% reduction in NatGas exports.

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February Non-OPEC Oil Production Climbs

February Non-OPEC Oil Production Climbs

Below are a number of crude oil plus condensate (C + C ) production charts for Non-OPEC countries created from data provided by the EIA’s International Energy Statistics and updated to February 2022. This is the latest and most detailed world oil production information available. Information from other sources such as OPEC, the STEO and country specific sites such as Russia, Brazil, Norway and China is used to provide a short term outlook for future output and direction for a few countries and the world.

February Non-OPEC production increased by 303 kb/d to 49,926 kb/d. Of the 303 kb/d increase, the biggest increase came from Canada 225 kb/d. Offsetting the increase were decreases from Brazil 116 kb/d and China 92 kb/d. The Febuary 2022 output of 49,926 kb/d is 2,274 kb/d lower than the March pre-covid rate of 52,200 kb/d.

Using data from the June 2022 STEO, a projection for Non-OPEC oil output was made for the time period March 2022 to December 2023. (Red graph).  Output is expected to reach 51,038 kb/d in December 2023. This is a 536 kb/d increase over the level reported in the previous report. Note the production drop of 848 kb/d to 48,947 kb/d in April in the red graph is associated with a production drop in the former Soviet Union.

Above are listed the world’s 11th largest Non-OPEC producers. The original criteria for inclusion in the table was that all of the countries produced more than 1,000 kb/d. The UK has been below 1,000 kb/d since January 2021. 

In February 2022, these 11 countries produced 84.5% of the Non-OPEC oil. On a YoY basis, Non-OPEC production increased by 2,929 kb/d while on a MoM basis production, it increased by 303 kb/d. World YoY February output increased by 6,750 kb/d. 

Production by Country

The EIA reported Brazil’s February production decreased by 116 kb/d to 2,917 kb/d. Brazil’s National Petroleum Association reported that April’s output increased by 18 kb/d to 2,999 kb/d, reversing February’s decline. (Red Markers). 

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Why Norway Won’t Give Up On Oil & Gas

Why Norway Won’t Give Up On Oil & Gas

Norway doesn’t have any second thoughts about oil exploration and investment in light of the International Energy Agency’s (IEA) report suggesting that no new fossil fuel exploration would be needed for a net-zero world.

Western Europe’s biggest oil and gas producer is doubling down on oil development and continues to consider oil exploration and production a critical part of its economy and income for the state.

Norway, the country with the highest electric vehicle (EVs) share of new car sales anywhere in the world, is not giving up on one of its core industries. The oil and gas sector is a major employer and the key contributor to the so-called oil fund, the world’s largest sovereign wealth fund with US$1.3 trillion in assets and holdings of 1.4 percent of all of the world’s listed companies.

The Norwegian government believes that the industry could reduce emissions and reach net-zero operations on the Norwegian continental shelf, at the same time ensuring new oil developments to support the local supply chain and employment. Norway is also betting big on offshore wind and carbon capture technology, including with strong financial support from the government, but it believes that oil and gas can continue to create value in the long term.

Norway is betting on offshore wind, hydrogen, and electrification to meet its commitment under the Paris Agreement, but its oil and gas sector will continue to play a major role in long-term job creation, economic growth prospects, and value for the country, the government said in a White Paper last month.

“The main goal of the government’s petroleum policy – to facilitate profitable production in the oil and gas industry in a long term perspective – is firmly in place,” Norway’s Minister of Petroleum and Energy, Tina Bru, said.

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Russia Voices Concern Over Increased US and NATO Military Activity in Arctic

Russia Voices Concern Over Increased US and NATO Military Activity in Arctic

Russia’s FM called for military meetings between Arctic states

On Thursday, Russian Foreign Minister Sergei Lavrov voiced concern over the uptick in US and NATO military activity in the Arctic. The comments were made in a speech at a meeting of the Arctic Council in Reykjavik, Iceland.

“We are concerned about what is going on close to our border with Norway,” Lavrov said. The US has been putting more focus on military cooperation with Norway as part of its strategy to confront Russia in the Arctic. Earlier this year, the US deployed long-range bombers to Norway for the first time.

Next year, Norway will host US and NATO forces for military exercises that will involve about 40,000 troops, which the head of Norway’s military said will be “the largest military exercise inside the Arctic Circle in Norway since the 1980s.”

The Arctic Council currently does not deal with military issues, something Lavrov said should change. “It is important to extend the positive relations that we have within the Arctic Council to encompass the military sphere as well,” he said.

On Tuesday, US Secretary of State Antony Blinken accused Russia of making “unlawful” claims in the Arctic, something he said the US will “respond to.” Blinken also warned against increased military activity in the region, but it’s clear that the US and NATO are set on militarizing the Arctic.

On Wednesday, Blinken met with Lavrov on the sidelines of the Arctic Council meeting, marking the first high-level in-person meeting between US and Russian officials of the Biden administration. While tensions are high between the two countries due to Biden’s hostile policies, Lavrov was cautiously optimistic and described the talk with Blinken as “constructive.”

5 ways Norway leads and Canada lags on climate action

As major oil and gas producers and exporters, Norway and Canada share a particular responsibility for confronting the planet’s existential climate threat. However, their different political, economic and cultural features have resulted in major differences in their climate policy track records.

Overall, Norway is a leader on climate change performance and Canada is a laggard. The 2021 Climate Change Performance Index ranks 61 countries on their progress in reducing greenhouse gas emissions, energy consumption, renewable energies and climate policy. Norway ranked eighth overall, while Canada was near the bottom in 58th place.

Both countries face epic challenges in weaning themselves from petroleum dependence — and putting an end to exporting carbon emissions. Canada is a long way from winding down the oil and gas industry and implementing a green and inclusive recovery.

One of the advantages Norway holds is the high degree of equality and inclusivity in the policy process, which translates into a healthier democracy than Canada’s. This is something Canada can learn from and improve upon.

Canada produces 4.7 million barrels of oil per day — 80 per cent of it from Alberta — and exports 79 per cent to the United States. The carbon emissions from the consumption of those fossil fuel exports are almost four times greater than the emissions produced in their extraction and processing. These emissions aren’t attributed to Canada, even though it’s responsible for making them available.

Norway produces 1.7 million barrels of oil daily and, since the country runs mainly on hydroelectricity, exports almost all of it, largely to Western Europe. Norway exports 10 times more emissions than it produces domestically.

Norway’s exit ramp from oil dependence is bumpy. Despite some contradictory climate actions, Norway’s progress exceeds that of virtually all petrostates, with Canada trailing behind.

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Norway’s Supreme Court to Decide on Climate Lawsuit Challenging Offshore Arctic Oil Drilling

Norway’s Supreme Court to Decide on Climate Lawsuit Challenging Offshore Arctic Oil Drilling

Greenpeace protest against Norway arctic oil drilling
The Supreme Court of Norway is set to rule in a high-profile climate change lawsuit challenging the Norwegian government’s licensing of new offshore oil drilling in the fragile and rapidly warming Arctic region. The forthcoming decision from Norway’s highest court could, for the first time anywhere in the world, invalidate offshore petroleum production on climate change grounds.

Hearings before the country’s Supreme Court in the case, dubbed The People v. Arctic Oil, began on November 4 and concluded on November 12; a decision is expected within the next few months.

The fate of the climate, and millions of people across the world affected by extreme weather events, hangs in the balance of every barrel of oil we either extract, or leave in the ground. The Norwegian state has an obligation to both the Paris Agreement and the Norwegian Constitution to minimise the health and safety risks from the climate crisis on future generations,” Frode Pleym, head of Greenpeace Norway, one of the organizations challenging the oil licenses, said in a statement. “The Supreme Court now has the unique opportunity to decide over the future of new oil drilling in the middle of a climate crisis.”

Greenpeace Norway and an environmental youth-led organization called Nature and Youth (also referred to as Young Friends of the Earth Norway) sued the Norwegian government in 2016 challenging the opening of new areas of the Barents Sea to oil drilling; the hearings over the past week are the culmination of this lawsuit which has weaved its way through the courts over the past four years.

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The Race For Arctic Oil Is Heating Up

The Race For Arctic Oil Is Heating Up

Arctic LNG

Despite climate concerns and environmentalist backlash against exploration for oil and gas in pristine sensitive regions of the Arctic, companies continue to explore for hydrocarbon resources in the Arctic Circle, in Russia and Norway in particular.

The largest Russian energy companies are looking to explore more Arctic oil and gas resources on and offshore Russia, while Norwegian and other Western oil firms are digging exploration wells in Norway’s Barents Sea.

Those companies lead the development efforts to tap more Arctic oil and gas resources as legacy oil and gas fields both offshore Norway and onshore Russia mature.  

Russia’s biggest energy firms Gazprom, Rosneft, Novatek, and Lukoil, and Norway’s oil and gas giant Equinor, as well as Aker BP and ConocoPhillips, are the top oil and gas producers in the Artic region, data and analytics company GlobalData said in a new report. Gazprom is the undisputed leader in Arctic oil and gas production, followed, at a long distance, by two other Russian firms, Rosneft and Novatek, GlobalData’s estimates show.

Russian firms are ramping up exploration in Russia’s Arctic, while Equinor and other Western companies drill exploration wells in Norway’s Barents Sea, hoping for a significant discovery that could add to the Johan Castberg oilfield—a massive discovery which was made in 2011, but which hasn’t been replicated in the Barents Sea so far.  

Yet, both Russia and Norway face specific challenges in getting the most out of their respective Arctic oil and gas resources. 

In Russia, the government has made Arctic oil and gas development a key priority and offers tax breaks for firms exploring in the area.

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Norway Detects Radiation Near Russian Border Days After Nuclear-Powered Missile Explodes

Norway Detects Radiation Near Russian Border Days After Nuclear-Powered Missile Explodes

Days after the Kremlin’s nuclear-powered missile exploded, killing seven and leading to evacuations, Norway detected tiny amounts of radioactive iodine in the air near the northern part of the country bordering Russia. 

According to Norway’s nuclear safety authority (DSA), the radioactive iodine was detected between Aug. 9-12 at its air filter station in the border town of Svanhovd, just under 450 miles from the Arkhangelesk region of northern Russia where the deadly blast occurred on August 8. 

At present it is not possible to determine if the last iodine detection is linked to the accident in Arkhangelsk last week. DSA continues more frequent sampling and analysis,” said DSA. 

Rosatom, Russia’s state nuclear agency, said on Saturday that the deadly blast involved “isotope power sources,” with no further details given. 

According to Reuters, detecting radiation is not unusual in Norway, as it’s monitoring stations routinely pick up radioactive iodine around half-a-dozen times per year from unknown sources. 

On Tuesday, however, Russia’s state weather service reported a 16x spike in radiation levels in the city of Severodvinsk. Meanwhile, first responders who treated victims of the accident were rushed to Moscow for medical examination according to Russian state-owned news outlet TASS.

Russian Nuclear Sub Wreck Leaking Radiation 100,000 Times Higher Than Normal: Report

Russian Nuclear Sub Wreck Leaking Radiation 100,000 Times Higher Than Normal: Report

Researchers in Norway have discovered radiation levels in excess of 100,000 times normal next to a Soviet-era nuclear submarine which sank in the Arctic 30 years ago – a reading which is higher than those taken 12 years ago, according to Norwegian news outlet TV2

The Kosomolets went down in the Barents Sea in 1989, killing 42 out of its crew of 69, according to the Moscow Times. It is sitting at a depth of 1,665 meters (5,462 ft) with a severely damaged hull from sitting on the seabed for 30 years. 

The radioactivity was detected near a ventilation hole which has been observed to kick up ‘mysterious’ dust clouds. 

We have observed a kind of cloud coming out of this hole once in a while. In connection with the test in which we measured pollution, a cloud came out of the hole. This may indicate that the pollution comes out in pulses, says Heldal.

It is assumed that the ventilation hole at the top of the submarine tower is in direct contact with the reactor inside the wreck. This hole will now be monitored extra closely by the researchers the rest of the cruise, which is scheduled to be completed tomorrow. –TV2

“The results are preliminary. We will examine the samples thoroughly when we get home,” said Hilde Elsie Heldal of the Norwegian Institute of Marine Research. Heldal believes that the plumes might be caused by ocean currents, tides or other conditions related to the movement of the ocean. 

The samples were taken as part of a joint operation between Norway and Russia which set sail from northern Norway on Saturday. 

In other news, Russian servicemen reportedly avoided a “planetary catastrophe” after a recent nuclear sub accident. No cluewhat it had onboard, but we’re guessing it would do more than vent little clouds of radiation. 

Life imitates art: Norway rejects oil prospecting in sensitive Arctic islands

Life imitates art: Norway rejects oil prospecting in sensitive Arctic islands

In what seemed like an episode of the Norwegian television drama Occupied, Norway’s largest political party joined smaller ones in the nation’s parliament to prevent oil exploration in the scenic Lofoten archipelago. The Labor Party’s environmental wing made climate change and scenic beauty big issues.

Unlike another contentious oil resource, Alaska’s Arctic National Wildlife Refuge, these islands get around 1 million visitors each year. That implies that many Norwegians have actually seen the islands.

In the history of oil-rich nations, Norwegians have followed an unorthodox path. While most such nations have chosen to subsidize domestic prices of petroleum products or at least keep them cheap by policy, Norway has taxed consumption of oil and oil products as if the country were an importer trying to economize on petroleum use.

A recent Bloomberg survey showed that the average price of a gallon of gas worldwide was $3.48. The range was 1 cent in Venezuela to $7.61 in Hong Kong. Norway ranked second highest at $6.89.

Even more strange is that Norway has become a leading market for all-electric cars. About one-third of all new cars sold in the country last year were all-electric. Of course, Norway has very large hydroelectric resources, resources which produced 93.6 percent of the country’s electricity in February 2019, the most recent month for which data is available. But these copious hydropower resources have long been available and didn’t prevent the country from becoming dependent on petroleum-fueled transportation just like the rest of the world.

Norway also made a fateful and propitious decision shortly after the discovery of its oil and natural gas riches in the North Sea. The country decided to invest much of the tax revenue derived from oil and gas in a sovereign wealth fund to be managed on behalf of the Norwegian people for use by future generations.

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What Norway’s Big Divestment Decision Means for Fracking, Tar Sands and Global Oil Exploration

What Norway’s Big Divestment Decision Means for Fracking, Tar Sands and Global Oil Exploration

Bergen, Norway

Norway’s sovereign wealth fund — a state-owned investment fund worth approximately a trillion dollars — recently announced it was divesting from oil and gas exploration companies around the world. Not surprisingly, many oil and gas stocks declined following the announcement.

While this is good news for the climate, this was simply a smart business decision. Norway’s sovereign wealth fund, known as the Government Pension Fund Global (GPFG), primarily exists due to Norwegian oil production. And the fund will continue to be a major investor in companies like Exxon.

It appears it’s just cutting its losses on money-losing endeavors like fracking in America, tar sands oil production in Canada, and frontier exploration by UK companies in Africa and South-East Asia.

“The government is proposing to exclude companies classified as exploration and production (E&P) companies within the energy sector from the [fund] to reduce the aggregate oil price risk in the Norwegian economy,” the Finance Ministry explained in a statement announcing the move.

Dumping Losing Assets

What that translates to in America is essentially a divestment from the shale oil and gas producers like EOG Resources, Apache, Continental, Diamondback, and Chesapeake. Apparently, the fund managers are tired of losing money on fracked oil and gas.

The move certainly comes at a bad time for the American fracking industry. Their previously endless supply of loans from Wall Street has also started to dry up, leading to budget cuts, layoffs, and reduced oil production. 

In Canada, among the companies targeted for divestment is Canadian Natural Resources, LTD — an Alberta tar sands oil producer. The Canadian tar sands oil industry has been losing money for several years and several major oil companies have sold tar sands assets, including Devon Energy’s recent announcement it was getting out of the tar sands production business.

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Is This A Precursor For Peak Oil Demand?

Is This A Precursor For Peak Oil Demand?

oil barrels

The $1 trillion sovereign wealth fund of Norway may sell off all of its shares in oil producers.

The move is a shot across the bow for the oil industry. A $1 trillion fund, built on oil itself, now sees the future of oil as too risky.

Norway’s sovereign wealth fund is not getting out of the oil business entirely. The government has only recommended exiting oil and gas exploration and production companies (i.e., upstream producers). The reason why the fund wants to pursue divestment is that it views the long-term oil market as volatile, unpredictable, and at this point, vulnerable to permanently low prices. “The goal is to make our collective wealth less vulnerable to a lasting fall in oil prices,” Norway’s finance minister, Siv Jensen, said. The fund currently holds about $37 billion in oil and gas stocks.

Based on that logic, the government wants to avoid the exposure to producers, since they will be the companies most impacted by changes in oil prices.

But the divestment is also one of the most powerful symbols yet regarding the potential for peak oil demand. The notion of permanently low oil prices is predicated on a peak and decline in consumption. And if a $1 trillion sovereign wealth fund views oil as inherently risky going forward, other investors could begin to fret. It’s worth noting that oil and gas stocks fellimmediately after the announcement.  

On the other hand, the selloff could also be viewed in the narrow interests of Norway itself. The sovereign wealth fund was built by oil revenues, so the divestment is a bit ironic. Critics might point out that it is a bit rich for a country that has been, and still is, funded by oil revenues to be taking such a stand on the future of the oil business.

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Norway to Track Cars GPS to Tax Per KM (Mile) – Your Govt is Next

COMMENT: Hi,
The Norwegian Data Protection Authority is now arguing that GPS based taxation, for the amount of kilometers driven by car, can be done within 5-6 years! Norwegians trust the government way too much, because they believe that this system will eliminate the need for road tax, fuel tax, toll roads and reduce the cost of car insurance.
No way will the tax be reduced! GPS based taxation is a governments dream! Who is to stop them from issuing parking fees or speeding tickets?
Norway also has a high number of electric cars, and an electric car is sold without any tax or VAT, has reduced road tax, free of reduced toll road passage and does not contribute to fuel taxation. With GPS active, the government can finally collect taxes from electric cars without the messy environmentalists meddling.
In the worst case, a corrupt government can use the system against its people to create implications, push the burden of proof over to a troublesome citizen, in court.
Norway may be a great country regards to statistics, but will be some kind of self-imposed totalitarianism if this nonsense continues. Stay away from Norway if you cherish your hard-earned cash!
And as always, thank you, Mr. Armstrong, for your service and enlightenment.
AA
Ex-social democrat
(see source #1)

REPLY: The political-economic system post-World War II has been a socialist driven agenda. “Vote for me and I will give you other people’s money.” This system cannot be sustained when those in power have promised themselves pensions. As government workers retire, they need to be replaced. The growth rate of government has started to explode. Instead of looking at the problem objectively, they are simply looking from paycheck to paycheck on how to meet the next payroll.

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Olduvai IV: Courage
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Olduvai II: Exodus
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