Norway looks to restrict foreign oil owners

Norway is seeking greater leeway to restrict foreign ownership of its offshore fields, a move seen to be potentially targeting a growing Russian interest in its resources.

In proposed changes to industry regulations, the Norwegian government beefed up its possibility to reject non-European entities on grounds of national security from acquiring offshore oil and gas licenses.

“I would interpret this as a wish to establish a safer legal basis to impose restrictions on foreign ownership,” said Ivar Alvik, a law professor at the University of Oslo.

Norway is grappling with accelerating changes in ownership of its oil industry, which is under pressure from the collapse in crude prices, a shift to renewable energy and dwindling resources. 

BP and ExxonMobil have relinquished their role as operators in Norway and big utilities such as RWE have sold their local oil and gas businesses. Smaller, more specialised companies, often backed by private equity, are picking up the pieces and Russian companies are among those seeking to move in.

The changing make-up is creating concerns about the financial strength of the newcomers and spurring questions about more strategic issues, such as protecting Norway’s natural gas system, according to Arild Moe, a senior research fellow at the Fridtjof Nansen Institute in Oslo.

“It’s infrastructure of a high strategic value,” he said. “It touches on very strong economic interests, both in terms of access and knowledge about how it works.”

The Norwegian Petroleum and Energy Ministry said the change puts the country more in line with the rest of Europe. 

The national security provision exists in a European directive, but Norway did not include this clause when it implemented the text in national law in the 1990s. 

Norway is not a member of the EU, but adopts significant chunks of EU legislation because it participates in the single market through the European Economic Area agreement.

While the new provision could be regarded as a “precautionary measure”, Russian companies’ involvement in Norway has been “high on the agenda” at a time of deeper tension between the government of Vladimir Putin and Western Europe over the conflict in Ukraine, said Mr Moe.

Norway approved Russian billionaire Mikhail Fridman’s bid to acquire RWE’s assets in 2014 and is facing the potential entry of Gazprom, which agreed last year to acquire 38.5% of OMV’s local subsidiary.

Bloomberg


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