Is the European Union Missing Another Energy Window of Opportunity?
Drilling in Skrugard field in the Barents Sea. Photo: Harald Pettersen
On November 18th the Norwegian Ministry of Foreign Affairs presented its White Paper on the High North – “The High North – Visions and Strategies”. This strategic policy update is supposed to set the course for the Norwegian High North Policy for the next 20 to 30 years.
The region has been identified as an essential new energy province in Europe, embedded in an environment of geopolitical considerations, upcoming challenges and widespread opportunities. The European Union and its member states have been mentioned in the context of several cooperation mechanisms, e.g. the Nordic Dimension, bilateral (energy) cooperation between Norway and EU member states (in particular France and Germany) and enhanced forms of dialogue between Norway and the EU’s institutions.1)
Simultaneously, the Norwegian Minister of Petroleum and Energy, Ola Borten Moe launched the first impact assessment study in the Norwegian sector of the earlier disputed Barents Sea area with the aim to open the concerned waters for offshore drilling. The bilateral maritime delimitation dispute between Norway and the Russian Federation was settled on September 15th 2010. Besides specifying the maritime boundary, the treaty also sets out procedures for the development of any gas or oil field straddling the new boundary. The treaty entered into force on July 7th 2011.
The next day, Norway started its first expedition, engaging in data collection and seismic mapping in the newly established border area. The Norwegian Petroleum Directorate expects the first significant results to be obtained by winter 2013. In addition, Statoil, Norway’s leading Energy Company, just announced efforts to reinforce its investments in Arctic projects, focusing particularly in the recently discovered and highly assessed Skrugard oil field.2)
The Barents Sea, an area considered to be both economically valuable and strategically important, is on the verge to be internationally revitalized after 40 years of economic stagnation and regional significance.
The EU and Norwegian Energy
The EU is fully aware of the recent developments and manifold opportunities the Barents Sea and Arctic region in general provide.3) Maria Damanaki, the European Commissioner for Maritime Affairs and Fisheries, recently addressed Arctic challenges, emphasizing the strategic partnership between the EU and Norway and clarifying the EU’s position to become an influential actor in the Arctic – “the golden rule is to get in early”.4)
Currently, Norway supplies 20 percent of the gas consumed in EU member states, making it the Union’s second largest supplier of gas. Most of the exports go to Germany, the UK, Belgium and France, where Norwegian gas accounts for between 20 and 35 percent of the total gas consumption.5) For the current decade the Norwegian gas production is supposed to reach between 125 and 140 billion cubic meters, compared to almost 100 billion cubic meters in the last decade.6)
Natural gas will continue to play a key role in the EU’s energy mix, as outlined in Energy 2020, the EU’s 10-year energy strategy. The strategy emphasizes the necessity of a strong international energy partnership, notably with the EU’s neighbours, calling for the establishment of privileged energy partnerships with key partners.7)
Norway features prominently in most of the policy documents that describe the process toward a common energy policy for the EU. Long term energy cooperation, facilitating sustainable and environmentally friendly exploration, was already considered by the Commission in 20088) and further addressed by the President of the European Commission, José Manuel Barroso.9) “The EU definitely wants to expand cooperation with Norway”, János Herman, the EU Ambassador to Norway, reconfirmed at the recent Arctic and Northern Areas Conference in Bodø (Norway).10)
Yet only a bilateral EU-Norwegian Energy Dialogue, with annual meetings at Commissioner/Minister level, was established in 2002. This dialogue principally aims at the coordination of energy policies, including research and technical development and the possible exploration of hydrocarbon resources in the High North. However the High North was only added to the European political discourse in 2006.
In September 2011 the European Commission adopted its Communication on security of energy supply and international cooperation. This Communication is supposed to set out the first comprehensive and coherent strategy for EU external energy policy. Focusing on the establishment of EU partnerships with its key energy suppliers, the Commission emphasizes the potential of the EU-Norway Energy Dialogue to be further enhanced and extended.11) Energy partnerships are aimed to promote EU’s key principles, including energy security, safety standards, regulatory cooperation, energy efficiency and research and innovation.
What to do?
The current developments in the Barents Sea can be regarded as both a temporal and structural “window of opportunity” for the development of a privileged energy partnership between the EU and Norway, with obvious advantages for the EU.
- Upgrade the relationship with Norway and enhance its cooperation:
A strategic energy partnership, e.g. called the “new framework agreement on strategic partnership and cooperation in the 21st century”, could be based on several key points, inter alia: confidence, security and predictability. This envisaged framework agreement could continue to develop the cooperation efforts, outlined in the EU-Norway energy dialogue, and further set out general obligations and specifically define elaborated goals of cooperation.
Both the EU and Norway share similar visions, values and norms with regard to resource exploitation, energy efficiency and environmental protection: affordable – reliable – clean. It is in the strategic interest of the EU to strengthen the cooperation efforts and ensure that international/European environmental standards are implemented at all times. An energy partnership agreement could design specific policy approaches and instruments regarding the European Arctic, encapsulating energy needs and environmental concerns.
European officials have to answer the following question: how can the EU, which assumes a leadership role in fighting global climate change and in promoting sustainable development, influence relevant external actors to act consistently with the EU policy pertaining to energy (security of supply agenda) and climate policy? - Strengthen Arctic cooperation and draw on your allies:
Norway is considered the most logical ally to cooperate regarding a more committed and coherent EU Arctic strategy. The bilateral relationship is governed by the EEA-agreement (European Economic Area), obliging Norway among other things to implement the EU’s internal energy market legislation. The country further supports the Commission*s application as a permanent observer to the Arctic Council.
A privileged energy partnership could not only strengthen the necessary cooperation, it could further be identified as a strong political commitment of the EU to the Arctic region. The two partners could act with one powerful voice with regard to the implementation of common international environmental standards concerning hydrocarbon resource exploitation, fisheries and navigation. The purpose of the framework agreement is to agree on joint actions to implement the measures required.
Hence, the current developments in the Barents Sea could also function as an initial point for a trilateral economic cooperation between the EU, Norway and the Russian Federation.
High North energy has yet not been perceived as an essential foreign policy asset for Norway. The Scandinavian country foreign policy builds upon a pragmatic external policy style, favouring bilateral ties and the primacy of Norwegian national sovereignty. A privileged energy partnership would not counteract that notion but additionally comply with Norwegian interests and combine High North diplomacy with the EU’s focus on energy security. A close cooperation with the EU could strengthen the Norwegian position on political, economic, environmental, and social issues.
EU-Norwegian energy cooperation would not have to start from scratch. Its Energy Dialogue already outlines the coordination of energy policies. Yet recent developments in the European Arctic and the European Commission’s strategy for a comprehensive EU external energy policy could be considered as influential incentives to strengthen the energy cooperation.
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