Energy in a changing geopolitical setting

Speech by the Foreign Minister of Norway Mr. Børge Brende at the Energy Security Summit in Stavanger, 28 August 2016.

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Excellencies, Ladies and gentlemen,

Let me start by thanking Offshore Northern Seas and the Munich Security Conference for jointly organising this first Energy Security summit in Norway. By bringing together some of the world’s top energy experts and finest security analysts, you have certainly set the stage for a discussion about one of the most fundamental issues of our time:

The role of energy in geopolitics.

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Today, as the world is facing an unprecedented cocktail of security challenges – ranging from terrorism and violent extremism to failing states and mass migration – this discussion is more important than ever.  

We simply cannot understand the world we live in unless we understand the global energy landscape. And understanding global security challenges is crucial for formulating sound and forward-looking energy policies. Although pointing that out to this audience feels rather like ‘taking coals to Newcastle’.

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Indeed, there are plenty of examples to illustrate the interaction between foreign policy and energy. Let me mention only a few:

  • Low oil prices have plunged countries like Nigeria and Venezuela into deep financial crisis.
  • In Iraq, oil is at the heart of every aspect of the country’s ability to survive as a state.
  • And Russia’s violations of international law in the Ukraine have made energy security a pressing issue in most European capitals.

I could go on, but the point is:  Energy is crucial in order to understand today’s world - also for a Foreign Minister

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We are facing a more challenging and unpredictable global political situation than we have for many decades.

We can look back at 25 years of unprecedented growth. Global value creation has doubled and world trade has multiplied four times since 1990. The number of people living in extreme poverty has been halved, while at the same time the global population has increased by two billion people.

But in the last few years, anaemic growth, failing states and growing protectionism have threatened to undermine some of the progress that has been achieved.

It is a great paradox of our time that the globalisation of the world economy is being met with an increasing nationalisation of politics.  We are experiencing greater vulnerability – and a feeling that the international order we have built in Europe, and globally, is fragile.

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For this audience, there is no need to go into detail about recent changes in the global energy industry.

I will limit myself to state that the shale revolution in the US can serve as a reminder of how unpredictable the future can be. This year, the first shipments of LNG reached Europe from the US.  For the first time, US gas exports are in direct competition with Russian gas – and Norwegian gas – in the European market.

Over the next 20 years, 85 % of the world’s growth in energy consumption is expected to take place in Asia. Europe’s relative geopolitical importance is declining as major energy suppliers in the Middle East, Russia and North America look to the east.

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At the same time, technological developments suggest that we in the future will see more diversified and decentralised energy systems. This trend is reinforced by global policy decisions to curb CO2 emissions and provide access to modern energy for all.

Let’s not forget that combating climate change is also a question of security. Climate change is a threat multiplier. It aggravates other security risks, such as conflicts and mass migration, particularly in fragile countries.

So, to accommodate a population growth of 3 billion by 2050, we will have to transform our energy systems, and we will have to decouple economic growth from carbon emissions.

In many economies, this is already happening. Investments are shifting from fossil to renewable energy production. The market is working.

However, the day when renewable supplies will be able to meet global energy demands is still far away. In the meantime, the world will increasingly rely on natural gas to help bridge the gap between fossil fuels and renewable energy.

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Such profound changes in the global energy landscape have important repercussions for foreign policy interests on at least two levels.

First, we must understand the nexus between global security and energy concerns in order to formulate robust policies that ensure long-term energy security.  

For an energy-exporting country like Norway, this is about ensuring fundamental commercial and economic interests. We need forward-looking policies that enable our companies to invest in the right technology and enter new markets at the right time.

The key question is not so much whether the relative power of states is constant. It is whether old and new actors alike follow the rules of the game.

In short, we have to make sure that emerging powers strengthen global energy markets rather than politicising them.

Second, if we do not understand how foreign affairs and energy markets intersect, we will have great difficulty in achieving other foreign policy goals.

Given the stakes involved, discussions on the geopolitics of energy tend to focus on the risk of conflict. Without ignoring such concerns, I would like to propose an alternative perspective.

The perspective that energy security is essential when addressing pressing foreign policy challenges  – such as combating terror, fighting climate change and preventing humanitarian disasters.

Indeed, eradicating poverty, and achieving the SDGs, is only possible if we connect the 1,1 billion currently lacking access to electricity.

The answer to climate change is energy policy.

The fight against ISIL can only be won if we cut off their income from selling oil and gas.

In fragile and conflict-ridden countries, improved access to modern energy can boost economic growth, employment opportunities and stability.

This is the motivation for Norway’s support to the energy sectors in countries like Myanmar, Liberia and Haiti.

We are making our experience and technology available to petroleum-producing developing countries, and assisting their integration into world energy markets.

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Let me return to Europe and the EU, which is Norway’s most important partner and energy market.

Churchill once said that the farther backward you look, the farther forward are you likely to see. As long ago as the oil crisis in the 1970s, Europe experienced that diversification of energy supply is crucial for its security interests.

Still, it was not until the Ukrainian gas crisis became part of a broader political conflict that the EU took serious measures to diversify its gas supply options.

I have just come back from Riga, and the Baltic States are feeling the consequences of Russian energy policy at first-hand.

Yet the situation is changing. As I have mentioned, we have seen the first LNG deliveries from the US.

There are also ambitious plans to deliver more gas through the Southern Corridor. Considerable gas reserves have been found on the doorstep of Europe, for example Egypt’s Zorn field and the Leviathan off the coast of Israel, and Iran is emerging as a potential player.

New LNG plants have been put into operation, and Norwegian companies have built the first floating LNG terminal in Lithuania.

In sum, this has significantly reduced the potential of using natural gas supplies as a political tool.

However, Russia will remain a major supplier of gas to Europe for the foreseeable future, and this will continue to have implications both for our foreign policy towards Russia and for Europe’s choice of energy solutions.

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The Norwegian approach to energy security is simple. We are a reliable and predictable provider of energy – and we will remain so. 

We believe the role of leaders should be to provide the predictable regulatory framework needed to allow companies to operate on a sound commercial basis.

Making politics out of the energy markets benefits no one: neither consumers nor producers.

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Even though the centre of world power is moving eastwards, the world has not – yet - been turned upside-down.

Norway’s basic approach to energy security remains unchanged: In a complex global security environment, we must avoid politicising energy markets.

This is not only vital for the security of energy supply. It is also fundamental for maintaining and strengthening the world order that has served us so well over the last decades. 

Well-functioning energy markets are essential for sustained global growth and for development. And they are indispensable for ensuring stability, for combating climate change and for eradicating poverty.

This summit is an excellent opportunity to enhance our knowledge about the security and energy nexus.

I look forward to listening to your insights.

Thank you.