20110630-IEA-Oil_and_Gas_Emergency_Policy_Norway_2011_update_17页_1mb

Summary of Norway's Energy Overview and Oil & Gas Policies

Core Content

Norway is a key player in the global energy market, primarily due to its significant oil and gas production from the Norwegian Continental Shelf (NCS). It joined the International Energy Agency (IEA) in 1975 and has the right to decide on its participation in emergency sharing systems. As a net exporter of oil, Norway is not bound by the IEA's 90-day stockholding commitment.

Key Oil Data

• Domestic Oil Production and Demand: In 2010, Norway's domestic oil production was 2.16 mb/d, while demand was 213 kb/d. Oil production has been declining since 2002, with a 35% drop from 2000 levels and a 25% drop from 2005 levels.
• Net Exports: Norway's net exports of oil (including products) stood at 1.9 mb/d in 2010.
• Proven Reserves: As of 2010, total proven oil reserves were estimated at 7.1 billion barrels.
• Transport Sector: Over half of the oil demand is in the transport sector, with motor gasoline, gas/diesel oil, and jet kerosene being the main fuels.
• Industrial Sector: Accounts for 30% of domestic gas consumption, with the majority of gas used in upstream oil and gas production.

Oil Supply Infrastructure

• Refineries: Norway has two main refineries – Mongstad (200 kb/d) and Slagen (110 kb/d), with a combined annual capacity of 310,000 barrels per day.
• Pipelines: Extensive sub-sea pipelines connect offshore fields to onshore terminals, with key systems including the Oseberg Transport System (765 kb/d), Grane (265 kb/d), and Troll I and II (565 kb/d).
• Storage Facilities: Norway has 26 main storage facilities, 50 distribution storage facilities, and about 400 total storage facilities. The total storage capacity as of end-January 2011 was 23 mb.
• Stockholding Obligations: Since 2007, the government has required companies to hold 20 days of their sales/imports in the domestic market. These stocks are commingled with commercial stocks and include gasoline, middle distillates, and heavy fuels.

Emergency Policy for Oil

• Decision-Making Structure: The Oil Emergency Organisation (EO), established in 2006, is responsible for emergency response. The EO includes officials from the Ministry of Petroleum and Energy (MPE), Ministry of Foreign Affairs (MFA), Ministry of Finance, Statistics Norway, and the Oil Emergency Board (OEB).
• Stockdraw Process: In an emergency, the MPE minister, with the help of the OEB, oversees the stockdraw process. The operational release is handled by Statoil ASA and/or Esso Norway.
• Stockdraw Rate: The stockdraw rate is determined based on the need and is implemented progressively. The government has no direct control over company-held stocks, but they must be released upon request.
• Stocks: As of end-January 2011, total industry-held oil stocks in Norway were 23 mb.

Demand Restraint Measures

• Historical Measures: Norway has a comprehensive demand restraint programme, consisting of three phases: saving campaigns, restrictions, and rationing by cards.
• Current Policy: Rationing by cards is considered a last resort and would only be implemented if a crisis lasted at least six months and consumption had to be cut by 20% or more. A three-month preparation phase is required for such measures.
• Status: The demand restraint system is not formally abolished but is in a dormant status.

Natural Gas Overview

• Production and Reserves: Norway is a significant gas producer, with production at 105.9 bcm in 2009. Estimated remaining gas resources are 4.0 tcm, of which 69% are discovered and 31% undiscovered. BP's 2010 review puts reserves at 2.05 tcm.
• Export Focus: Over 80% of gas consumption is in the upstream production process, with the rest primarily used by industry and residential sectors. Norway exports almost all of its production.
• LNG Projects: The Snøhvit LNG plant, located in the Barents Sea, was completed in 2007 with an annual export capacity of 5.75 bcm.

Key Natural Gas Data

• Domestic Gas Demand: In 2010, demand stood at 6.573 mcm/y.
• Gas Consumption by Sector:
  • Upstream: 80%
  • Industry: 15%
  • Residential: 6%
• Net Imports: Norway has high net imports of natural gas, with import dependency remaining unchanged.

Taxes and Pricing Mechanism

• Petroleum Taxation: Norway has a special surplus taxation system for oil and hydro power. The marginal tax rate on excess returns in the petroleum sector is 78% (50% special tax + 28% corporate tax).
• Product Taxes: Taxes on diesel are lower than those on gasoline, promoting a progressive "dieselisation" of the vehicle fleet. The tax rates are detailed in the table provided.

Oil Company Operations

• Mergers and Ownership: In 2007, Statoil ASA and Norsk Hydro's petroleum activities merged. The Norwegian State owns approximately 67% of the merged entity, Statoil Hydro ASA.
• Upstream Sector: Nearly sixty oil companies are active in the upstream sector, with more than one-third acting as operators. Statoil accounts for almost 70% of all activities on the NCS.
• Storage and Distribution: The country has a robust storage and distribution system, including large storage terminals, distribution storage, and coastal sub-storage sites.

Legal and Policy Framework

• Legislation: The new Act of Petroleum Product Storing for Emergency Purposes (2006) mandates company-held stocks during peacetime supply disruptions.
• Enforcement: Companies can be fined up to EUR 1.27 million (NOK 10 million) for non-compliance. There is no financial support for these obligations, and companies can pass on additional costs to consumers.

Conclusion

Norway's energy policy is characterized by a strong focus on oil and gas production, a robust infrastructure, and a preference for stockdraw over demand restraint in emergency situations. The country remains a net exporter of oil and gas, with significant reserves and ongoing exploration efforts. The legal and institutional framework supports emergency response measures, ensuring the country can contribute to IEA collective actions when necessary.