“The misfortune of some is the happiness of others“: this expression of Voltaire is particularly adequate to describe the current economic situation of Norway. Since the beginning of the Russian invasion of Ukraine, on February 24, 2022, gas and oil exports have tripled… and with them, the benefits of the country.
Profits that are problematic
This year, Norwegian oil and gas export revenues hit record highs: $97 billion in six months – 3 times more than last year. The profits of oil giant Equinor, 67% owned by the Norwegian state, rose from $1.9 billion at the end of 2021 to $6.8 billion in the second half of 2022.
The majority of these profits will be placed in the Norwegian Sovereign Fund, which should allow the country to diversify its economy, while gradually exiting the fossil fuel sector.
But several countries point the finger at these profits, which they believe have explained ethical problems. Polish Prime Minister Mateusz Morawiecki accuses Oslo of profiting from the war in Ukraine, and asks the Norwegian government to support the Ukrainian war effort more: “are we worth paying Norway gigantic sums for gas which cost four to five times less a year ago? This is madness… The Norwegians had to share these profits. It’s not normal, it’s unfair. It is indirectly profiting from this war started by Putin.“
A point of view shared by the Norwegian branch of the organization of the Oslo Committee. Its General Secretary, Berit Lindeman, explains: “Norway makes 60 billion more profits on gas and oil in just a few days… but Oslo has only increased its support for Ukraine by 1 billion euros. We believe that with this huge income, we have to try harder, and give a lot more.“
This week, the daily Dagbladet also took a position: “Norway cannot escape the unpleasant fact: it is a form of war profit. (…) While Ukraine is being destroyed and Most other countries mainly feel the negative effects of war, such as rising energy prices, rising food prices and general inflation, we make a profit and spend that money.”
This question also divides Norwegian society: while some say that helping Ukraine is a fair return, others prefer that this money be invested inside the country.
The Norwegian Green Party has called for the additional billions of petrodollars to be placed in a “solidarity fund“, like a Marshall Plan. It could be used to finance both humanitarian aid and the reconstruction of Ukraine, but also to help Europe reduce its dependence on Russian gas.
The centre-left government has so far promised”until“2 billion crowns (200 million euros) in humanitarian aid to Ukraine.
Acceleration of gas pipeline construction with several European countries
Since April, the construction of the Baltic Pipe gas pipeline, depending from Norway to Poland via Denmark has resumed. Warsaw hopes to start importing 10 billion m³ of gas via the Baltic Sea this fall, before official commissioning in January 2023.
Oslo will also issue more operating permits to its suppliers, and speed up the construction of other gas pipelines to other European countries. A boost that can, however, have harmful consequences… and accelerate climate change.