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Alex Kimani

Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

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Energy Espionage Is Threatening The Renewable Boom

At the height of the shale boom, the Eagle Ford was a spy den on the level of Beirut.  Industrial espionage was in full swing, with foreign governments and foreign companies dying to get their hands on American fracking trade secrets. 

The Chinese consulate in Houston was likely the epicenter of Beijing's fracking espionage efforts. Consulates always are. That's how it works. This is nothing new, and no one should be surprised.  

But more recently, a new report out of Norway sheds light on how oil and gas spies have trained their sights on a country widely regarded as one of the greenest on the planet.

The fracking trade secrets have all largely been uncovered at this point. Now, it's time to move on to … greener pastures. 

The Norwegian counterintelligence service PST has sounded the alarm over industrial espionage by Russia, China, and other countries looking to glean secrets from Norway's petroleum industry. But it's also warned that the country's renewable energy sector could soon become the target of cyberattacks by foreign spies.

Norway is the world's third-largest exporter of oil and gas after Saudi Arabia and Russia, and Western Europe's second most important source of natural gas after Russia. And there's no fracking involved. 

And the country has no plans to extend its production curbs when they expire at the end of the year, though it complimented OPEC+ production cuts with its own.

Related: Who Will Foot The $40-Trillion Energy Transition Bill?
The PST report revealed that more than 50 Norwegian oil and gas companies, including Norway's national oil company (NOC) Equinor ASA (NYSE:EQNR) and the oil and energy ministry, were jointly targeted in a well-organized cyberattack six years ago. 

According to PST, intelligence services by Russia, China, and other countries have large technological and human resources as well as lots of patience that allows them to work on espionage plans over long periods of time.

According to the FBI, corporate espionage in the global oil and gas industry mostly involves stealing intellectual property, including a company's trade secrets, research, and proprietary information. This ranges from drilling equipment to pipeline insulation and can be something as simple as the widget that you use to drill or a process that you use to track inventory better. This kind of espionage can result in lost revenue, interruption in production, lost employment, damaged reputation, and lost investment for research and development (R&D).

The main culprits are domestic and/or foreign commercial rivals, start-up companies, foreign Intelligence officers (spies), disgruntled employees (insider threat), or organized criminals. 

In the case of Texas fracking companies, employees of drilling firms were targeted when they traveled outside the United States with the contents of their company laptops stolen. 

Alternatively, individuals were actively placed inside target companies, or disgruntled employees would simply go rogue and begin collecting and selling trade secrets, mainly as an act of defiance to strike back at their employers.

So, Why Norway?

Norway is frequently viewed as a role model for renewable energy, not only within Europe but also in the global arena. And the new game in town is a $40-trillion green energy transition. That's a massive amount of money on the line and makes for a smashingly lucrative espionage terrain. 

The Nordic nation likes to project a squeaky green image to the wider world, including nearly 100% renewable power generation, a champion of electric mobility, a world-class innovator in cleantech, a tiny domestic carbon footprint, and a vocal proponent of international climate treaties.

Indeed, Norway is one of the greenest nations on the planet, currently generating 98% of its electricity from renewables, mostly from hydropower.

Related: UAE Oil Is A Vital Geopolitical Weapon Against China's Middle East Expansion

Norway has also emerged as an EV paragon, with plug-in electric vehicles accounting for more than a third of new car registrations last year, while the country's share of full electric vehicles ranks as the highest in the world.

Yet, a closer look at Norway's energy sector reveals a contradictory reality: Norway's economy remains largely dependent on gas and oil exports. In fact, a good 18% of Norway's GDP and a staggering 62% of exports are directly tied to the oil and gas sector. The numbers are much lower for the United States, with just 8% of GDP coming from fossil fuels.

And Norway is no saint either when it comes to expanding its oil and gas territories.

Already a giant among Europe's gas and oil producers, Norway is still developing new oil fields in the North and Barents Seas. The country has put up dozens of new offshore exploration blocks for bidding in the current year alone and could hand out a record number of licenses for exploration in the Arctic Barents Sea in the coming year.

Despite the clamor to go green, oil and gas remain indispensable for Norway, which has no plans to stop exploring and drilling in new fields--as long as the demand is there. With Europe's renewable energy elites still this aggressive with fossil fuels, don't expect their peers to the west to act any better.

At the same time, it is pushing forward with massive renewables projects, including  Equinor's partnership with Scotland's SSE Plc. (OTCPK:SSEZY) to develop "the largest ever offshore wind project anywhere in the world" valued at £6B (~$8B).

That combination makes Norway a major target for espionage across the energy spectrum. 

For everyone, though, the biggest espionage threat is China. Hands down. 

And 5G telecommunications will be the most powerful espionage tool we've ever seen. 

As U.S. Director of National Intelligence John Ratcliffe noted earlier this week: "China's efforts to dominate 5G telecommunications will only increase Beijing's opportunities to collect intelligence, disrupt communications and threaten user privacy world-wide. I have personally told US allies that using such Chinese-owned technology will severely limit America's ability to share vital intelligence with them."

By Alex Kimani for Oilprice.com

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