07:26 GMT13 June 2021
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    Oil in Turmoil (134)

    The Norwegian government is preparing to open its coffers in an unprecedented bid to enhance oil-related research to alleviate the crisis-stricken energy sector's problems. Norway's traditionally staunch national economy has been on a slippery slope, with both unemployment and inflation recently reaching their highest point in years.

    At present, Western Europe's biggest crude oil producer is pondering an additional outlay of 50 million kroner (over 6 million dollars) on the so-called Demo2000 program, which will increase total spending to oil-related technology to 220 million kroner (roughly 27 million dollars) this year alone. Norway has been increasing its outlay on oil technology research: last year it spent only 70 million kroner (8.5 million dollars).

    According to Petroleum and Energy Minister Tord Lien of the Progressive Party, this is the largest allocation for this purpose in Norway's history.

    "This money will help to curb the fall in the competence-driven oil industry," Tord Lien said to news outlet E24. He did not disclose the source of money, but implied that no cuts are scheduled within his industry in the new budget.

    According to Lien, the oil industry must be able to handle the current short-term crisis, while simultaneously preparing for a coming upturn.

    Norwegian Oil and Gas CEO Karl Eirik Schjøtt-Pedersen, one of the branch's figureheads, called the budget increase "cheerful."

    "It may actually give rise to a number of projects contributing to more efficient production and lower emissions. The industry will contribute with its share. Together, the government and the industry may help strengthen the industry's competitiveness," Schjøtt-Pedersen said.

    In the interim, the slumping oil market has triggered a significant downturn in Norway's traditionally oil-heavy economy, prompting an increase of the unemployment rate to 4.6 percent or 130,000 people in a country of 4.6 million, recent figures from Statistics Norway showed.

    On top of all, it became known this week that the Norwegian inflation rate in April was twice that of Belgium, which had second highest inflation rate in Europe. The main reason for this is the deteriorating condition of the Norwegian krone. At present, Norway is running an inflation rate of 3.2 percent, whereas the krone is about 14 percent below its average against the euro over the past five years. 

    ​"The Norwegian krone has lately depreciated substantially, and it takes time for the effects of this to cease affecting inflation figures," Marius Gonsholt Hov, senior economist at Handelsbanken Capital Markets, told E24.

    Oil in Turmoil (134)
    Oil, unemployment rate, financial crisis, inflation, energy prices, Tord Lien, Scandinavia, Norway
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