Norway Oil Security Policy

Norway has comprehensive legislative and regulatory frameworks in place to respond to an oil emergency, as the country’s economy remains very reliant on oil, especially for transport. According to the terms of Norway’s participation in the IEA, the country is not obliged to adhere to oil emergency response measures, as a major net exporter of oil. However, not only does Norway participate in all of the oil emergency work of the IEA, it also participated in IEA Collective Actions, most recently in March 2022. The oil emergency framework is primarily geared to releasing oil stocks held by the industry, and the country’s oil security system is part of the national security structure, Civil Emergency Planning (CEP), under the Prime Minister's Office, within which separate ministries take responsibility for assuring security in their respective fields. Ministry of Trade, Industry and Fisheries has a key role in emergency situations.

Following Russia’s invasion of Ukraine in February 2022, and the expected downgraded role of Russia as a global oil and natural supplier, Norway is strengthening its role as a stable global supplier of oil and gas, while at the same time paving the way to the 2050 net zero world. 

Organisation

The oil security system in Norway is part of the national security structure, CEP under the Prime Minister's Office, within which separate ministries take responsibility for assuring security in their respective fields. The Ministry for Trade, Industry and Fisheries (MTIF) is responsible for oil contingency planning, emergency preparedness, emergency stockholding and crisis management in Norway. However, decisions to initiate a stock release as part of an exercise or joint IEA collective action is made jointly with the Minister for Trade, the Minister for Foreign Affairs and the Minister for Petroleum and Energy. In certain, more serious situations, the whole of government could be involved in the decision-making process if deemed necessary.

The responsibility for security of supply of fuel was transferred from the Ministry of Petroleum and Energy to MTIF in 2017, and applies for the whole system, starting from processing in the refinery sector to the end user (gas stations). That change included the transfer of the law and regulation on emergency storage of petroleum products.

The 2006 Regulation relating to Petroleum Product Storing for Emergency Purposes and the 2011 Act on Business and Industry Preparedness provide for the legal basis of the country’s oil emergency system. Both give the MTIF wide-ranging powers to prepare for and manage oil supply crises, including implementing a stock release, ordering fuel companies to deliver products to specified consumers, temporarily taking operational control of the assets of fuel companies, and instructing fuel companies to provide data relating to imports, exports, storage and the distribution of crude oil and oil products. The 2006 regulation has been enacted pursuant to the terms (articles 1-2) of the 2006 Act of Petroleum Product Storing for Emergency Purposes (APP). The 2011 Act on Business and Industry Preparedness regulates the interaction and cooperation between the commercial and the public sectors concerning disruption of supplies.

The government is considering updating the APP. A number of amendments to the Act are being considered, including changes to the quantity and categories of oil that suppliers are obliged to hold. A revision of the component of crude oil that companies can hold as part of their emergency stockholding requirement will likely be necessary also following the closure of the Slagen refinery in 2021.

While the system works well and is well known to stakeholders, Norway has not prepared an Emergency Handbook specifying exact roles, responsibilities and steps of action in case of different levels of crises. While the government conducts vulnerability and threat assessments, it believes that most supply challenges can be resolved without specific planning or measures, relying instead on industry to address most supply issues.

During the last decade, there have been no instances in which the government has had to intervene in fuel markets; industry operators themselves deal with any small-scale localised fuel supply disruptions caused by adverse weather conditions or short-term logistical issues.

The Norwegian National Emergency Strategy Organisation (NESO) is comprised of representatives from the MTIF, the Ministry of Petroleum and Energy, the Ministry of Foreign Affairs, the Ministry of Finance, the statistical office (Statistics Norway), and the Council for Fuel Preparedness, an industry advisory group. In the event of a supply emergency, the NESO can be convened within a matter of hours.

The Council for Fuel Preparedness was formally established in 2018 to advise the government on issues related to the supply and distribution of oil products in Norway, as well as to increase collaboration between government and the industry on issues relating to oil security. The Council consists of 9 representatives from the main fuel suppliers in Norway. There are safeguards in place to prevent anti-competitive behaviour among fuel suppliers who sit on the Council. In case of crises, the Council serves as a liaison between the government and the industry facilitating decision‑making.

Emergency oil stocks

While Norway has no stockholding obligation towards the IEA, the 2006 Act on Contingency Storage of Petroleum Products places a stockholding obligation on industry.

The organisation and holding of the stocks are conducted by the obligated companies. They report to Statistics Norway quarterly, who in turn informs the ministry that the companies are compliant (or not) with the regulation. MTIF can also ask any company to provide updated stock data at any time and in emergency situations the government has the authority to instruct the companies on how, when and where to release the stocks.

In practice, the companies keep stocks by having a larger inventory than what is needed for commercial purposes. In case of a release of emergency stocks, obligated companies simply no longer reserve these volumes, and allow them to go to market through normal market mechanisms. Emergency stocks are normally co-mingled with stocks held for commercial purposes.

Stock composition

The 2006 Regulation stipulates that any company which produces and imports more than 10.000 m³ per year of any product listed in the regulation, has an emergency storage requirement equal to 20 days of consumption. The products currently on the list for emergency storage are divided into three categories:

• Category 1: Gasoline
• Category 2: diesel, light fuel oil, firing paraffin, jet fuel, marine gas oils
• Category 3: Heavy distillates, heavy fuel oil.

Companies are allowed to hold up to 40% of their obligation as crude oil, condensate or semi-finished products. Stocks can also be kept as components – but the requirement states that all components must be stored in order to make up the finished product requirement. There are some exceptions to the storage requirement, such as sales for export and sales to the defence forces in the country. Legislation provides for fines of up to NOK 10 million (Norwegian kroner) for breaching the stockholding requirements, but spot-checks are not frequently carried out to verify reported stock levels. There is also no explicit provision in place to reduce or waive the biofuels blending mandate in the event of a prolonged supply shortage or logistical issues. This could pose an impediment to effectively responding to a supply disruption, as most biofuels are imported, and as the already substantial blending mandate increases further.

Norway has no requirements regarding where the stocks are kept within the national territory, but the regulation excludes storing the volumes outside of the country.

Demand restraint measures

While the 2011 Act on Business and Industry Preparedness specifies that the government has broad powers to control the distribution of fuels in times of crisis, there is no specific regulation concerning demand restraint measures in Norway, and the government, if required, would use general crisis management provisions to introduce fuel rationing. However, Norwegian authorities consider rationing to be a sub-optimal measure for mastering of peacetime oil supply crises, notably because of the long timeframe needed to prepare for implementation. As with many other countries, the government has powers to control the distribution of fuels during crises. The country’s legislation states that: “where, due to risk of demand shock, supply shortage or logistical failure to ensure that the needs of the population, the needs of the armed forces, the needs of allied military forces in Norway or international obligations related to goods and services are met, the King may make further provisions regarding (a) the assignment of priorities for, redistribution, storage and surrender of goods, performance of services, as well as preparations for and participation in the same, including provisions concerning imports, exports, distribution of goods and sale of goods and services, including measures to regulate sales”. Powers under this clause are delegated to the Ministry of Trade, Industry and Fisheries.