1. Norwegian gas in Europe Jakub M. Godzimirski EUNOR Seminar 8 October 2015 Oslo

2. Outline Broader energy picture 2015 EU’s energy dilemmas Norway as an energy actor in Europe

3. Broader energy context 2015: market and actors Main fuel importers 2008Main fuel exporters 2008 Unit Value in USD billion ShareUnit Value in USD billion Share World, excluding EU-Intra trade2,625.6100.0World, excluding EU-Intra trade2,565.6100.0 European Union (27) 619.023.6 Russian Federation 307.412.0 United States501.919.1Saudi Arabia281.011.0 Japan267.810.2Canada125.94.9 China168.86.4European Union (27)114.04.4 Korea, South142.55.4 Norway 113.74.4 India115.84.4United Arab Emirates103.34.0

4. Norway - long-term trends in petroleum production and export

5. Energy related dilemmas 2015 Producers vs consumers  Complementarity and interdependence? Buyers market vs sellers market  security of supply vs security of demand Producers vs producers  To co-operate, to compete or to diversify markets? Consumers vs consumers  To co-operate, to compete or to diversify supplies and mixes? Risks vs security  how much risk are producers and consumers willing to take? Predictability vs volatility  long-term contracts or hub based contracts? Transit dependence vs direct access Sustainable energy vs non-sustainable energy  climate change focus or availability and affordability? Domestic energy needs vs export commitments Energy and politics  To instrumentalize, or not instrumentalize? To politicize, or not to politicize? To securitize, or not to securitize? Paradigms: realist vs liberal  zero-sum game vs win-win game

6. EU Energy Strategy (Green Paper 2006)

8. What’s Norway’s role in energy supply to Europe?

9. EU, Russia, Norway and energy – some key facts Imports from Russia represent 34% of EU’s gas imports 23% of gas consumption 33% of crude oil import 30% of oil consumption 23% of petroleum products import 30% of coal imports Imports from Norway represent 30.7% of EU’s gas imports 15.2% of EU's crude oil import Russia’s energy going to the EU 88% of exported oil 70% of exported gas 50% of exported coal Norway's energy going to the EU 73% of oil exported, most going to the EU 97% of gas exported, most going to the EU

10. NorwayRussia Energy consumption, mtoe (BP 2014) 45699 Energy production, mtoe (IEA 2013) 195.351314.88 Net energy exports, mtoe (IEA 2013) 164.84571.81 Energy export value, USD billion (WTO 2010 data for 2008) 113.7307 Share of fuels in export in % (WTO 2010) 67.765.7 Share of global fuel exports in % (WTO 2010) 412 Oil reserves in billion tons (BP 2014) 112.7 Oil production mtoe (BP 2014) 83.2531 Oil export mtoe (2013 IEA, 2014 BP data for 2011) 72234 Natural gas reserves in TCM (BP 2014) 231.3 Gas production in bcm (BP 2014) 108.7604.8 Gas export piped, bcm (BP 2014) 102.4211.3 Gas export LNG bcm (BP 2014) 3.814.2 Share of petroleum sector in state revenues 2013 29.150 Share of energy in export (2013 Norway, 2012 Russia) 48.971.4 Value of petroleum based sovereign wealth funds (SWF), USD billion 893181.8 Value in SWF per capita in USD thousand 178 6001 266 Energy portaits of Norway and Russia 2015

11. Who depends on whom in energy terms? Norway and EU member states 2013 CountryShare of energy import from Norway United Kingdom32.20 Germany20.05 France15.57 Netherlands13.05 Belgium5.59 Sweden3.74 Denmark3.69 Italy1.64 Spain1.32 Ireland0.90 Austria0.85 Poland0.54 Luxembourg0.41 Finland0.31 Portugal0.15 Czech Republic0.00 Bulgaria0.00 Estonia0.00 Greece0.00 Croatia0.00 Cyprus0.00 Latvia0.00 Lithuania0.00 Hungary0.00 Malta0.00 Romania0.00 Slovenia0.00 Slovakia0.00 CountryShare from Norway/GIC Denmark28.27 Netherlands22.31 United Kingdom22.22 Belgium13.67 Luxembourg13.11 Sweden10.56 Ireland9.09 Germany8.58 France8.33 Austria3.51 Spain1.54 Italy1.42 Finland1.26 Portugal0.95 Poland0.77 Czech Republic0.01 Bulgaria0.00 Estonia0.00 Greece0.00 Croatia0.00 Cyprus0.00 Latvia0.00 Lithuania0.00 Hungary0.00 Malta0.00 Romania0.00 Slovenia0.00 Slovakia0.00

12. Petroleum sector in Norwegian economy Brief history, current situation and close future Source: Dagens Næringsliv 17.09.2015

13. Norwegian gas in Europe 2015 – background Most of Norwegian gas is exported through pipelines to Europe; Some LNG export from Snøhvit; Share of gas in Norwegian export has risen from 24% in 2002 to 61% in first half of 2015; Gas prices in contracts are more and more based on spot prices and not on oil price; Gas prices on the European market are more stable than oil prices on the global market; Demand for gas in Europe has been falling, especially in power generation sector, where gas has been partly replaced by cheaper coal; Fossil fuels are under pressure due to concern for climate change; Dependence on gas imports, especially from Russia, is strongly politicized in some EU countries.

15. What makes Norwegian gas a preferable solution for Europe? 1.Norway shares norms and values with all members of the European Union and is de facto a European insider through its ‘membership’ in the EEA. 2.Norway is a predictable democracy and co-operation with Norway is therefore not bound with any strategic and political risks, not least due to the fact that Norwegian policy-makers have been consistently pursuing the policy of non-politicising their energy supplies. 3.Supplies of gas from Norway to Europe do not run the risk of disruption by transit countries as Norwegian gas reaches Europe directly. 4.Being a member of the transatlantic alliance Norway shares a strategic vision and concerns with all its European gas customers and is often viewed as a source of politically safe energy.

16. Who are the EU’s key energy partners today Can Norway ‘profit’ from a positive politicization of its energy?

17. Norway and European renewables Is Norwegian hydropower to compete with Norwegian gas?

18. Does Norway have a grand strategy and has energy any role in it? Grand strategy - an all-encompassing concept guiding a country in its efforts to combine its instruments of national power in order to shape the international environment and advance specific national security goals. Three elements: set of objectives (ends); instruments or tools (ways) by which these objectives are pursued, and the resources (means) available for realization of GS. Feaver’s definition of grand strategy: the collection of plans and policies that comprise the state’s deliberate effort to harness political, military, diplomatic, and economic tools together to advance that state’s national interests. Gaddis’ definition of grand strategy: the art of relating all of the means at your disposal to the ends you have in view. Energy, as the basis of economic growth, can be found at the heart of virtually every country’s strategic evaluations. It is therefore crucial to understand how energy policy forms part of national grand strategy, in order to better understand how energy and security are intertwined and reveal how energy factors into a whole host of interactions between countries, actors and global institutions. Energy can be viewed as an end or objective to be achieved by the realization of a grand strategy; a way or a tool of achieving security objectives defined by grand strategy; a means or a resource for national security strategies. M.L. O’Sullivan, “The Entanglement of Energy, Grand Strategy, and International Security,” in: A. Goldthau (ed.), The Handbook of Global Energy Policy, Wiley-Blackwell, London, 2013, pp. 30–47.