An Oil Refinery in Arctic Norway for the War Effort
The Center Party in Northern Norway is united in its desire to build an oil refinery in the region, a move backed by the party leader. “Overkill,” says a professor who slams the proposal.
“We know that the share of electric vehicles in Northern Norway is very low. People drive diesel and gasoline cars. We have to face that reality. We cannot develop policy based on how we wish the world looked, but rather on how it actually is.”
Bent-Joacim Bentzen, an MP representing Nordland, is unequivocal.
While party leader Trygve Slagsvold Vedum still hopes for a parliamentary majority to lower fuel taxes, his party colleagues in Northern Norway have concluded that the country needs a new refinery. This would allow Northern Norway to produce its own fuel.
Strengthening Norwegian Preparedness
The cut in gasoline and diesel taxes passed by Parliament in March became the major political issue of the spring, as The Arctic Century reported in Norway: Fuel Price Crisis in Oil-Producing Country.
But when the tax cut expired on September 1, prices skyrocketed. Prices hovering around 30 kroner per liter have ignited the debate.
“We believe this is exactly the right move, and it is also important given the current security policy situation,” Bentzen tells NRK.
The oil refinery at Mongstad, 60 kilometers north of Bergen, is Norway’s only one; it is owned and operated by Equinor. It has the capacity to process around twelve million metric tons of crude oil into fuel.
However, the Center Party believes this capacity is insufficient. Currently, Norway exports crude oil for refining before buying back the finished fuel.
Equinor: “No Plans in Place”
However, Equinor has no plans to expand.
“There are no plans to build a new refinery,” writes Communications Director Sissel Rinde in a text message to NRK.
That does not dampen the ambitions of the Center Party in the north.
“Should a crisis or war arise, we need to possess this capacity ourselves,” says Bentzen.
Would Strengthen NATO
A report from the Norwegian Defence Research Establishment (FFI) from March shows that Norway relies on imported fuel. Limited transport routes make Northern Norway particularly vulnerable.
“In wartime, the gap between available peacetime volumes and wartime needs could become significant,” the report states.
“Northern Sweden and Northern Finland lack this capacity as well, so this is also something that would strengthen NATO,” says Bentzen.
He is supported by party leader Trygve Slagsvold Vedum.
“When a crisis hits, hospitals start running on diesel. The Armed Forces run on diesel; excavators run on diesel. So much relies on diesel, especially in a crisis situation. As it stands, Norway only has 20 days of reserves, which creates a very vulnerable situation,” Vedum tells NRK.
Professor: “A Very Bad Idea”
However, economics professor Frode Steen at the Norwegian School of Economics (NHH) is far from convinced by the proposal from the north.
“It is a very bad idea,” Steen tells NRK.
“Anything is possible, but it would be very expensive. The reason no commercial players have found it worthwhile to do this is that we already have sufficient production capacity at Mongstad.”
He notes that Mongstad produces 80 percent of the fuel required in Norway. The Arctic Century has previously covered the refinery’s role in supply preparedness: Norway Is Profiting from Europe’s Fuel Shortages.
A better measure, Steen argues, would be to increase Norway’s fuel stockpiles.
“That is what most other countries do. We don’t have the same level of storage capacity as others—partly because we have Mongstad—but building a refinery just to solve that problem would be overkill.”
Can politicians mandate the construction of such a facility?
“Politicians can decide whatever they want, but it would be a very costly decision. It would require ongoing subsidies, which could end up being very expensive for Norway,” he says.
Source: NRK (in Norwegian)