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Norwegian government open to continued oil exploration

Norway's Oil and Energy Minister Terje Aasland says that, in the long term, in light of the current energy and security situation in Europe, there are increased opportunities related to oil exploration in the Barents Sea.

Published: 27 November 2022 16:06 CET

Oil transport

Norway has become the largest exporter of gas to Europe after Russia cut off its gas supply. Photo by Emmaus Studio / Unsplash

The Norwegian government has an agreement with the Socialist Left Party (SV) that the 26th licensing round for oil exploration will not be launched this year.

Still, Minister Aasland told the newspaper Dagens Næringsliv (DN) that he is open to issuing a call for new blocks next year.

“The Norwegian continental shelf is much more attractive now. The Norwegian continental shelf plays a much larger, more important role for European energy security (now) than ever before,” Aasland noted.

The war in Ukraine

Norway became the largest gas exporter to Europe after Russia cut off its gas supply.

“I believe that the opportunity in the Barents Sea in a long-term perspective has been strengthened through the situation that we are experiencing.

“The need for gas has not diminished with the situation that has unfolded with the war in Ukraine…

“I feel that the European Union (EU) wants Norway to develop its oil and gas activities further, (so that it can) be a stable and long-term supplier of gas,” Aasland added.

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What lower inflation in Norway means for you

Inflation is slowing

Norway’s Consumer Price Index, CPI, which measures changes in prices for household goods and services, has slowed yet again.

Between April last year and the same month this year, prices in Norway rose by 3.6 percent. It marks the third time that price increases have been below four percent since the start of 2022.

The figures, released by Norway’s national data agency Statistics Norway, mark the fourth month in a row where the 12 monthly inflation figure has been lower than the yearly figure from the month before. This means prices are rising less rapidly than before.

“Price growth decreased for the fourth month in a row in April. Prices are still higher than they were at the same time last year for most goods and services, but they are generally rising more slowly than before,” Espen Kristiansen at Statistics Norway said.

Food remains one of the biggest contributors to inflation

The price of food and non-alcoholic beverages rose by 3.3 percent from March to April, according to Statistics Norway.

Chocolate, soft drinks, coffee, and citrus foods saw the biggest price increases, which the national data agency called “unusual.”

What wasn’t unusual, however, was the cost of food rising following Easter, when many supermarkets ran offers to compete for customers.

“The rise must be seen in the context of the fact that large offer campaigns in connection with Easter dampened prices in March,” Kristiansen said.

The figures for April show that food prices in Norway have increased by 6.8 percent compared to a year ago.

The rising cost of food and drink in Norway could potentially outgrow wages this year, even if expected pay bumps will outpace forecasted inflation overall.

Economists expected inflation to fall more

Inflation hasn’t eased as much as some experts were expecting. Core inflation, which excludes energy prices and taxes, was measured at 4.4 percent year on year in April. This is above what economists surveyed by the newswire Reuters expected.

Norges Bank, the country’s central bank, raised the policy rate to a 16-year high of 4.5 percent in December. The bank has said that inflation should generally be around two percent, so it has used interest rates to curb price increases.

As inflation isn’t falling much quicker than expected, economists predict that the central bank may wait until December before slashing rates – which for consumers means that loan and mortgage repayments will remain high for the foreseeable future.

“The fall in inflation has not been much greater than Norges Bank has thought. This, therefore, indicates that an interest rate cut may come in December instead of September,” Kjersti Haugland, chief economist at DNB Markets, told public broadcaster NRK.

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