Norway passes two controversial gas projects amid protests

Norway's outgoing government squeezed through two controversial projects in what green activists fear marks a turning point toward more market-driven exploitation of the country's vast oil and gas resources. Protesters blocked the two entrances to the building that houses the prime minister's office and police made 17 arrests. The two projects that sparked the demonstrations are a natural gas-fired electricity and heating plant planned for mid-Norway and a 1 bn kroner subsidy ($ 1 = NOK 8.7945) for the development of a natural gas field in northern Norway.
Norway is Europe's largest exporter of oil but at the same time Norwegians have traditionally seen their own country as clean and green since almost all energy is generated by hydropower. Norway has no gas-fired plants supplying electricity to consumers.
Observers say the government pushed through the gas plant go-ahead before handing over power later this month, because it is worried about Norway's heavy dependence on hydropower and refutes the pollution worries of green activists. The NOK 1 bn tax break to companies developing the gas field arose from legislators' wanting to generate jobs in a depressed northern Norway. The subsidy still needs approval by parliament.
Norway's state-owned oil and gas company Statoil and its partners stalled the development of the field earlier this year, until the financial ministry offered to amend petroleum tax laws to boost the field's profitability. "The Labour Party wanted to do it before there's a change in government," said Ilen Lirum Boasson, whose organization, the Norwegian affiliate of Friends of the Earth, organized the demonstration. "They're afraid the Christian Democrats will slow down the process."
The Christian Democrats, who oppose the measures, are forming a coalition with the Conservative and Liberal parties to form the new government, after September's election failed to produce an outright winner. But the three parties -- which do not agree on either the subsidy or the powerplant- are still negotiating their joint platform and aren't expected to take power for at least another week.

The government approved the construction of a natural gas-fired power and heating plant in Skogn by Industrikraft Midt-Norge. US-based energy company Mirant owns 40 % of the firm, with Norwegian interests, including Statoil, holding the remaining share. The project is only the third natural gas-fired plant to receive government approval in five years. A dispute over easing pollution regulations to allow the construction of the other two, first approved in 1997, caused the collapse of the Christian Democrat-led government in March 2000.
"We found that the positives linked to building out Skogn outweighed the potential negatives," said Bjoerg Sandal, the Labour Party state secretary in the Ministry of Petroleum and Energy. "This was an environmental issue, but also an energy-political issue and we need the energy." Electricity prices in Norway soared earlier this year as drier weather resulted in below-normal reservoir levels.