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REGIONAL JOURNALISM, GLOBAL PERSPECTIVE.

Business
Norway

After the last oil

Climate change has made it possible for Norway to line up a replacement for its declining oil industry
Business
Trust in God, but keep your R&D robust

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Once upon a time, Tromsø, Norway, was called the Paris of the North. Even though they were closer to the North Pole than the Métropole, Tromsø’s women were often dressed in the latest fashions. When the city’s fishermen left southern ports after selling their catch, their boats brought back with them the finest for their sweethearts and wives.

Norway’s offshore oil and gas reserves has long since cemented the perception of the sea as a source of fortune and the next chapter in this story is now unfolding. The government and Norwegian businesses have their eyes firmly on the country’s waters, including those in the Arctic, in search of new sources of income now that climate change is making operating there easier.

“Twenty percent of the world’s remaining oil and gas reserves are found in the Arctic and 20% of fish in the world’s oceans are found in the Arctic,” says Sturla Henriksen, the managing director of Norges Rederiforbund, a shipping lobby.

“There are also large deposits of minerals and ores both on the ocean floor and on land throughout the region. When sea ice melts, those resources will be easier to get at, and, when the permafrost thaws, land-based infrastructure – roads and railways for example – will become less reliable. That means you’ll need to sail. A warmer climate also means that the great Arctic rivers in Russia – the Ob, the Yenisei, the Lena – will become more navigable. We’re also going to see more cargo shipping between Asia and Europe on Northern routes. Ninety percent of world trade still moves by ship, and, by shipping it north of Russia, you cut a third of the distance off the normal route through the Suez Canal.”

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All of this needs to happen in an environmentally responsible manner, Mr Henriksen underscores. The Arctic still lacks infrastructure, but, as he puts it, “the ice is melting faster than scientists’ predictions”.

Oslo accepted long ago that Norway’s oil reserves are going to dry up. In order to make sure it has something else to live off once they do, the current government has plans to make huge investments in the coming years in research and innovation that can lead to the next big maritime ventures. More than 2,000 people attending in Tromsø this week’s Arctic Frontiers, a major annual conference, heard repeatedly how Norway intends to unveil an oceans strategy this spring.

“We only utilise a fraction of the potential of the blue economy,” says Børge Brende, Norway’s foreign minister and a former director of the World Economic Forum, a Swiss organisation that seeks to shape global agendas. “In a span of just 30 years, we’ve built up an aquaculture industry that has made farmed fish Norway’s second most important export item. We export 100 million kroner [$12 million] of fish each year, all thanks to systematic research and development. Our new maritime strategy will look to identify other opportunities the sea might hold. The economies of our Arctic region are already growing faster than those of the rest of Norway.”

Norway’s oceans strategy is also being promoted as an important development for the rest of the world. As an example, Per Sandberg, Norway’s fishing minister, pointed out that 70% of the world is covered by ocean, and 90% of it is unexplored.

“The sea is key to solving the big challenges faced by a world with a growing population: food, energy, medicines. Today, only five percent of our food comes from the seas. And, given that seafood is more climate-friendly than mean, it’s no wonder that the UN has made better utilisation of the seas parts of its sustainable-development goals.”

The OECD, a Paris-based organisation of industrialised countries, forecasts the value of maritime activities will double by 2030. This is an outlook Karmenu Vella, the EU’s maritime and fisheries minister, supported in Tromsø. 

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At the same time, Norway’s track-record managing its fish and oil reserves has created a measure of trust that it will be able to do the same with new forms of maritime business. Since 1975, Norway and Russia have jointly fostered sustainable fishing in the Barents Sea, and, today both nations catch growing and very lucrative quantities of fish there.

Also, Norway’s oil and gas industry is one of the world’s most tightly regulated. As David Balton, a US ambassador who leads the Arctic Council’s senior arctic officials, explains it: “If anyone can do it responsibly, the Norwegians can.”

Matching sizeable investments and political focus is not something new in Norway.

In 2005, for example, Oslo made the Arctic the key pillar of Norwegian foreign policy, a position it has held ever since, surviving changes of government. Mr Brende underscored during a public appearance in Tromsø (pictured above) that “our Arctic policy is the spearhead of our foreign policy”.

The decision to prioritise the Arctic has helped spur growth in Norway’s northern-most regions, and also allowed Oslo to achieve other political goals. Mr Brende, for example, explained that northern Norway shares a border with Russia, and that the two countries have what may be the world’s most asymmetrical military balance.

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Large parts of Russia’s atomic arsenal are based on the Kola Peninsula, due east of northern Norway, while Norway, for its part, recently gave permission to the US to station 300 marines there, the first time since the Second World War that foreign troops will be stationed in Norway for anything more than short-term deployments. The current deployment will last just six months, but when they leave a new contingent of 300 marines will arrive.

Likewise, Oslo has managed to convince Norwegians that the Norwegian oil and gas industry benefits not just international stability, it is also good for the climate. In the Norwegian view, its oil and gas provide Europe with a stable energy source during a period of uncertainty abroad. And the tightly regulated Norwegian industry benefits the climate by providing an example for oil and gas extraction in neighbouring Russia.

Erna Solberg, the prime minister, defended this view during Arctic Frontiers, despite fierce criticism from, among others, Jeffery Sachs, an economist who heads the Earth Institute, a sustainable-development think tank at Columbia University.

During a debate with Ms Solberg, Mr Sachs criticised oil exploration in the Arctic as being a disaster for both Norway’s economy and the climate. Ms Solberg, for her part, maintained the official line: that there is no benefit to the climate if Norway leaves its oil and gas in the ground.

In fact, the opposite, she said, was true: thanks to advanced Norwegian technologies, emissions from Norwegian oil and gas exploration is far lower than emissions in low-cost countries like Saudi Arabia.

The author is a Danish journalist who has written extensively about Arctic issues, including most recently  The Greenland Dilemma.

Photo: Alberto Grohovaz/Arctic Frontiers