In times of heightened geo-political tensions, one of the biggest worries for Europe is its energy security with Russia being the key source of energy supply to European countries. This article discusses how Norway plays an important part in Europe’s energy security and if Norway’s role in energy security will increase in the coming years.
To begin my discussion, I would first like to present a chart that gives the top ten gas exporters in the world and this will put into perspective where Norway stands as compared to peers in the natural gas exports industry.
Norway is among the top gas exporters in the world and the location advantage makes Norway a key gas supplier to European countries.
However, it is important to see data on what percentage of EU gas demand is met by Norway and that will put into perspective the country’s role in an environment of elevated geo-political tensions in the region.
The chart below gives the major suppliers of gas to the European countries and it is clear that Russia plays a dominating role with 35% of EU demand being met by the country.
However, Norway is the second biggest contributor to energy security in the European countries and will remain so in the next 5-10 years. If we look at the top ten gas exporters, Iran is missing from the list with the country having gas reserves, which is among the highest in the world.
With sanctions being lifted, Iran can be a potential supplier to Europe in the coming years, but I don’t see Iran capturing significant market share in the next 5 years. The country’s oil and gas infrastructure needs big investment in the coming years and increasing production significantly and that is unlikely to happen soon.
Further, it is also important to note that Iran now shares cordial relations with Russia and for energy security in the European countries, Russian gas supply remains critical.
Another point that I want to mention here is that Norway’s contributing share to EU’s gas demand is unlikely to increase in the next 5 years and my point is backed by data on expected gas production in Norway during the period 2016-2020.
As the chart below shows, Norway’s gas production during the period 2016-202 is likely to remain stagnant and this implies that the European countries can’t shift their dependence on Norway on the coming years.
In conclusion, Norway is a significant contributor to gas demand in Europe and is likely to remain a significant contributor in the coming years. However, Norway’s production profile for oil & gas is likely to remain stagnant in the next 5 years (at least). This factor is likely to work in Russia’s favour in terms of the impact and say the country will have in global geo-politics.
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