Norway, the Scandinavian nation that is Western’s
Europe’s major oil producer, is about to get a government led by its Labour
party in the coming days.
The opposition led by Labour party achieved a
landslide victory, gaining over 100 seats in 169-seat parliament in which the
winning party just needs 85 seats.
The election in Norway was a major concern for
analysts in the crude oil markets, in particular and any other markets in
general, due to its status as one of the wealthiest nations on the planet. In addition,
it is Western Europe’s largest oil and gas producers with an enviable welfare
state for its citizens with an impressive sovereign wealth fund of over $1.4
trillion.
Although the future role of fossil fuel was at the
centre of election campaigns of all major parties, the Labour party wanted to
address what it called, ‘social inequalities’, in addition to the former.
Both Labour party and the Conservatives that lost
the election, prefer gradual transition to renewables to knee-jerk abandoning
urges of the Greens, which is part of the opposition coalition.
Since the revenue from oil and gas accounts for 14%
of Norway’s GDP, moving away from such a source of revenue at a stroke is
easier said than done. In this context, the move by the newly elected
government and its predecessor in exercising caution is understandable.
The newly elected government will certainly expand
Norway’s renewable drive in order to address the grievances raised by its
left-wing partners while keeping them on board.
Simultaneously, it may try not to hamper the current
activities of its oil and gas industry that directly employ over 150,000 people
and millions at secondary level; it cannot ignore the fact that 40% of its
exports are from oil and gas sector.
At present, we are in the middle of a gas crunch in
Europe and Norway’s oil and gas production is vital for the region in the
coming months, especially when approaching the harsh winter.
The fact that the UK was forced to fire up some coal
power stations last week, when there was not enough wind to turn wind turbines
in producing electricity, shows the vulnerability of the nations if they rely
completely on renewables without a viable substitute; it happened when the
country faced with gas supply problems.
Of course, Norway will not turn its back on its oil
and gas industry in a matter of months. It cannot ignore the concerns of the
Green partners of its new government either. On balance, the country will try
to walk the tight rope when the emotions, both pro and against fossil fuels, will
mimic the Northern Lights in the background of political realm.
The political developments, especially related to an
election fought in a campaign based on the vital industry, however, are adding
additional uncertainties to the oil and gas markets.
There are enough concerns already in the Middle East
that keeps the markets in a loop of perpetual uncertainty. Oil and gas markets
cannot afford to add more of them and to be at the mercy of whims and fancies
of impulsive political developments.
