Watching GovernmentChange in Norway

March 27, 2000
An environmental issue toppled Norway's government earlier this month, also threatening proposals to sell part of state-owned Statoil.

An environmental issue toppled Norway's government earlier this month, also threatening proposals to sell part of state-owned Statoil.

The government of Prime Minister Kjell Magne Bondevik resigned after Parliament voted 81-71 to revamp a pollution law and allow construction of Norway's first two natural gas-fired power plants (OGJ, Mar. 20, 2000, Newsletter).

Bondevik's three-party, minority government had held just 42 of Parliament's 165 seats since coming to power in October 1997.

Norway generates nearly all of its electricity with hydropower. Bondevik argued the gas-fired plants would require the government to relax limits on greenhouse gas emissions.

Supporters of the new law said that, if the plants weren't built, Norway would have to import electricity from coal-fired plants in Denmark and Poland that produced even more pollution.

Norwegian power company Naturkraft-owned equally by Statoil, Norsk Hydro, and Statkraft-will decide next year whether to proceed with the units, the first of which would start up in 2003.

New government

Jens Stoltenberg, the Labor Party leader and the new prime minister, formed a new government. Labor is Norway's largest party with 65 parliamentary seats. But it will have to compromise with other parties to enact any policies, so little change is expected until after the next parliamentary election in September 2001.

Stoltenberg, a former energy minister, named Olav Akselsen to hold the oil portfolio. Akselsen was head of parliament's Energy and Environment Committee. He succeeded Marit Arnstad as energy minister.

The major short-term energy policy question facing Norway is whether to raise oil production. Norway has been cooperating with the Organization of Petroleum Exporting Countries (to which it does not belong) to restrain crude output. It has cut production by 200,000 b/d to about 2.8 million b/d but is still one of the world's top exporters.

Output is likely to go up. Stoltenberg said last month that continuing high oil prices could damage the global economy.

Statoil sale

The future of Statoil is the key long-term energy policy issue. Last year, Statoil urged Norway to reorganize its oil and natural gas assets, giving the company additional properties to make it the world's fourth-largest publicly traded oil company.

Statoil said that, with more assets and less government ownership, it could compete better with multinational and state oil companies on the world scene.

The issue proved too controversial for Bondevik's government, which had postponed a white paper regarding Norway's oil asset reshuffling.

Akselsen recently said that the Statoil debate is likely to be delayed until after the 2001 election so that the issue could be presented to voters.

Labor leaders have expressed a willingness to consider privatization of up to a third of Statoil. But they maintain that "the oil and gas resources belong to the people" and that the current arrangement needs "sensible adjustments" rather than "fundamental changes."