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Faculty of Economics

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Ozawa, M.

Trust and Norwegian-Russian Energy Relations

CWPE1444

Abstract: Trust in Norwegian-Russian energy relations is one in the making. Both sides have actively pursued to build trust, particularly over the past decade. The process has been driven by shared economic interests, the prominence of the petroleum industry in both countries, and a desire to improve political relations on both sides. Factors shaping trust are pre-existing on the one hand, and determined by the actors’ signals on the other. Different organisational and cultural preferences likewise play a role in the development of trust and degree of co-operation. This study argues that the current level of trust is neither high nor low when compared to other bi-lateral relations with Russia. While trust appears to have contributed to breakthroughs in co-operation such as the resolution of the maritime border and new joint ventures in oil exploration, a lack of trust owing to diverging interests and market forces is inhibiting collaboration in the realm of gas. This potentially puts Norway and Russia on a path to increased competition for their primary gas markets, first in Germany and then in the rest of continental Europe. As the two main gas suppliers of the EU, this suggests serious implications on the future of European gas markets, the return on investment for their upstream gas industries, and energy security in the region.

Keywords: Trust, natural gas, oil, trade, co-operation, Norway, Russia, Europe

PDF: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1444.pdf

EPRG Paper Link: 1418

Open Access Link: https://doi.org/10.17863/CAM.5855