Last reviewed 14 July 2021
Europe’s northernmost country, and one of its richest, Norway offers strong export potential for British firms across a multitude of sectors.
A country of just five million people and famed worldwide for its stunning fjords and fearsome Vikings of yesteryear, the Kingdom of Norway now enjoys one of the world’s highest standards of living. That’s in large part down to its vast offshore oil and gas deposits, first discovered in the late 1960s.
Since then, it has been a major energy exporter to the UK, Europe and the rest of the world, amassing a gigantic sovereign wealth fund in the process, now worth an estimated US$1.3 trillion. It is now the largest oil exporter outside of the Middle East and one of the world’s leading gas producers.
It has also given the country a unique strategic significance, helping to even out western Europe’s gas imports from any over-dependency on Russia. Norway supplies roughly 40% of the UK’s energy needs.
Two pipelines connect the two countries directly: the Vesterled pipeline link to St Fergus in Scotland, and the Langeled pipeline to Easington in Yorkshire (at the time of launch, 2006, it was the longest underwater pipeline in the world at 1200km). As well as hydrocarbons, Norway also possesses an abundance of other natural resources including minerals, lumber, seafood and fresh water.
A European Union (EU) outsider, Norway occupies a long strip of land stretching from the south, where the capital Oslo is located, right up into the Arctic Circle, where the town of Hammerfest has become a hive of activity for the oil and gas industry.
Other major urban centres include Bergen, Norway’s second largest city, Tromso, in the far north, and Trondheim, on the west coast facing out to the Norwegian Sea.
The country is bordered along its eastern flank by Sweden, while in the north there are shorter borders with Finland and Russia. This latter frontier has long been a key staging post for British and other NATO troops during Arctic warfare training exercises, underlining Norway’s political and geo-strategic significance. Indeed, Norwegian ex-premier Jens Stoltenberg is the current secretary general of the NATO defence pact.
For the most part, Norway has been a beacon of peace and has long played an active role as an international mediator in global hotspots.
In a similar fashion, its businesses, including state energy firm Equinor, have also long been advocates of transparency even in complex overseas operating environments in territories such as Angola, in west Africa. Telecoms firm Telenor, for instance, recently announced plans to sell its subsidiary in Myanmar following a military coup in the south-east Asian country.
While gas imports from Norway remain vital for maintaining the UK’s current energy supply, bilateral business links expand far and above commodities into areas ranging from finance and fishing to football. Manchester United manager Ole Gunnar Solskjaer is one of countless Norwegians to have played in, and now managed, England’s soccer leagues.
More business is on the cards too, after the UK and Norway wrapped up a post-Brexit trade deal in July. The deal is expected to boost sectors including digital, financial and professional business services as well as cut tariffs for British exports.
It was signed with Norway and two other non-EU countries, Iceland and Liechtenstein, on 8 July 2021 — boosting a combined trading relationship worth £21.6 billion last year.
International Trade Secretary Liz Truss said it would also support jobs, cut red tape and open up further opportunities for UK firms.
“I urge businesses across the country, from farmers to fintech, to seize the fantastic opportunities this deal presents”, she said at the signing event.
Norway’s Minister of Trade and Industry Iselin Nybø called the UK market “of great importance to Norway”.
The deal maintains existing access to duty-free quotas for key British exports like cheese, and will cut tariffs as high as 277% for exporters to Norway for products such as West Country Farmhouse Cheddar, Traditional Welsh Caerphilly, and Yorkshire Wensleydale cheese.
It also means innovative fintech firms will be able to provide financial services into Norway without having to provide that service elsewhere first, helping the UK to maintain its status as a financial services hub.
UK firms are supported in Norway by an active Norwegian-British Chamber of Commerce, which also runs events in London and Aberdeen.
It means British firms will be able to expand in a market that is already one of the world’s most advanced economies — and one that is poised for more growth in the year ahead.
The mainland economy contracted by 2.5% in 2020 in the wake of the Covid-19 pandemic, is thought to be the weakest development since 1945, Statistics Norway reported.
A solid recovery is on the cards, however, according to the Organisation for Economic Co-operation and Development (OECD). It forecasts real gross domestic product (GDP) growth of 3.4% in 2021, rising to 3.7% in 2022, with the gradual lifting of restrictions unleashing consumer demand.
A revival in oil prices on the back of an economic uptick globally is also expected to drive activity connected with the petroleum sector.
Other key industries include shipping, fishing and food processing, pulp and paper mills, timber mining and textiles. Furthermore, ongoing digital and green transitions will add further impetus, as Norway’s overall economy adjusts in the post-Covid era and to increasing climate change pressures.
The Nordic region generally managed to dodge the worst economic fallout from the pandemic, though Norway’s substantial wealth deposits have always provided a reassuring cushion in times of need.
High living standards also mean higher prices, one reason the country has avoided mass tourism, though it still attracts considerable numbers of UK visitors, at least pre-Covid. The Foreign, Commonwealth & Development Office (FCDO) estimates that around 580,000 UK nationals typically visit every year drawn to Norway’s unspoiled nature, glaciers and luxury cruises along the fjords.
Perhaps one of the key tests facing Norway — and an area where UK firms can play an important partnering role — is in the evolution of its green energy sector, as the world transitions away from fossil fuels.
Though it remains one of the world’s largest oil exporters, clear steps have already been taken to adjust to the concerns of environmentalists, including the renaming of the state energy firm. Equinor was renamed in 2018 from its original Statoil, to reflect its shift to a broader-based energy company, one that exploits wind and solar power as well as oil and gas.
The state-owned company is already helping the UK transition to a lower carbon economy, nurturing the development of net zero industrial clusters along England’s east coast. In Norway, it also started construction in January 2021 on Northern Lights, Europe’s first full-scale carbon transportation and storage project.
Equinor is also a stakeholder with SSE on the Dogger Bank wind farm, off the north-east coast of England, which is now being built in three 1.2 gigawatt (GW) phases. Overall, the company expects to increase its current installed capacity to 12–16 GW, around 30 times the current level, by 2035, on its way to becoming a net zero energy firm by 2050.
Norway has also long been a major producer of hydroelectricity, given its unique and dramatic landscape, with surplus volumes traded through cross-border interconnectors.
Despite this trend toward cleaner energy, UK companies are deeply linked to the development of Norway’s oil and gas sector. Among them is Wood Group, which has a longstanding partnership with Equinor.
In June 2021, it signed an extension to an existing framework agreement with the state oil company to help it drive down costs and improve efficiencies across various offshore platforms and projects.
“Securing this extension is testament to the strong performance of the Wood teams and solidifies our position as a leading provider of integrated offshore solutions in the Norwegian Continental Shelf”, said Craig Shanaghey, Wood’s president for operations in Europe.
Around half of the UK’s current exports to Norway are services, and the local market is keen on British brands and products.
It is a technologically and digitally advanced market and there is a growing interest in responsible consumption and healthy, sustainable products, according to the UK Department for International Trade. And, according to world business rankings, Norway is also one of the easiest and most transparent places in which to operate.
English is widely spoken, and the country is also in close proximity, within just two hours’ flight time from a host of UK airports. Norwegians are likewise familiar and comfortable with UK culture, sharing bonds in music, sport, and the arts — the iconic painting “The Scream” was created by a Norwegian Edvard Munch in 1893 and is today housed in The National Museum in Oslo.