With Hormuz shut, Norway urges EU to rethink Arctic oil ban — despite analysts and environmentalists

The EU is reviewing its Arctic strategy — at a point in time when it is facing the largest oil supply disruption in history. Almost three months after the US-Israeli attack on Iran, the Strait of Hormuz remains effectively shut, with no clear diplomatic solution in sight. Against that backdrop, Norway is pushing Brussels to rethink its long-standing opposition to oil and gas development in the European Arctic.

In submissions to the EU’s public consultation on its Arctic policy , which closed in March, Norway’s Equinor and a lobby group backed by Shell, TotalEnergies and ConocoPhillips also urged the EU to drop the effective ban on Arctic drilling. The commission says that it had “taken note” of these views, but that talks are still at an “early stage” and that “no conclusions” have been drawn. It also insists it remains committed to its 2021 Arctic strategy , which calls for oil, coal and gas to “remain in the ground” in the region. But if the Middle East crisis drags on into the autumn review, pressure to shore up new sources of supply may start to count. The question, however, is whether dropping opposition to Arctic oil would meaningfully increase Europe’s energy security, and at what environmental cost. “It feels like it would probably be more symbolic than anything else,” said Greg Roddick, upstream analyst at Wood Mackenzie, when asked what a policy reversal would mean in practice for investment and drilling activity. “No EU member really has any direct Arctic territory to be drilled,” said Lewis Lawrence, also an analyst at Wood Mackenzie. The countries that do are Norway and Greenland, and they operate outside EU jurisdiction. Greenland, though associated with Denmark, holds autonomous mineral rights and does not require Danish or EU permission to drill. A policy shift might lower the cost of capital, unlock financing, or signal to international oil companies that the region is open for business, but this effect would be small. “There’s not going to be a rush of companies looking to explore in EU Arctic waters because it’s really up to the Norwegians,” said Roddick. The companies already operating in the Barents Sea, chiefly Equinor and Aker BP, are state-adjacent Norwegian players and would lead any further exploration, according to the analysts.

Key points

• In submissions to the EU’s public consultation on its Arctic policy , which closed in March, Norway’s Equinor and a lobby group backed by Shell, TotalEnergies and ConocoPhillips also urged the EU t…
• The commission says that it had “taken note” of these views, but that talks are still at an “early stage” and that “no conclusions” have been drawn.
• It also insists it remains committed to its 2021 Arctic strategy , which calls for oil, coal and gas to “remain in the ground” in the region.
• But if the Middle East crisis drags on into the autumn review, pressure to shore up new sources of supply may start to count.
• The question, however, is whether dropping opposition to Arctic oil would meaningfully increase Europe’s energy security, and at what environmental cost.