The New Underground Suez in Norway

The Stad Ship Tunnel is a project underway to bypass the Stad Peninsula in Vestland County, Norway. The peninsula marks the boundary of the Norwegian Sea and the North Sea and, is considered one of the main barriers to running a fast passenger service along the coast as well as the transfer of goods from land to sea. The Ship Tunnel will be 1.7 kilometres long, 37 metres high and 26.5 metres wide, allowing ships of up to 16,000 tonnes. It will be able to handle ships the size of coastal steamers to navigate more safely through the Stadhavet Sea. Along this stretch of coast, there are no outlying island to protect from high energy winds and waves thus, the peninsula is incredibly exposed and famously, Norway’s most dangerous coastline.

The ship tunnel, estimated by Forbes to cost $325 million, will be the first of its kind. Snøhetta, a Norwegian architectural corporation who were also responsible for the Norwegian National Opera and Ballet, and the National Transport Plan unveiled the plans in 2013, construction is to begin in 2022. The Storting – Norwegian Parliament – approved preparations to begin in March 2021. Terje Andreassen is the project manager, and states that the tunnel may be open by 2025.

Conventional blasting of three million cubic metres of rock is envisaged using undergrond drilling rigs and pallet rigs. Materials must be delivered by sea owing to the inadequacy of local roads, and a rock wall will be used to keep the tunnel free of water during construction. Work on alternative solutions, including the establishment of a new commercial area, is taking place locally.

The Observatory of Economic Complexity (OEC) states that $58.7B of Norway’s exports are from the oil and gas industry – in the form of crude petroleum, petroleum gas and refined petroleum. The next biggest export is non-fillet fresh fish at $6.8B. Both of these are, of course, heavily dependent on maritime transportation. So how will the construction of this ‘underground suez’ impact Norway financially and socially?

Naturally, efficient transport systems provide economic and social opportunities and benefits that result in positive multiplier effects such as employment. There will be minimal employment loss as the towns on the route remain the same; meanwhile, job creation will be vast for construction and maintenance.

Another multiplier effect is additional investment. The shortening of voyages will cause a space-time compression which will alter the sense of place. With the advance in transport, isolated parts of Norway will be ‘brought’ closer together in terms of the relationships and connections with investor countries. With this globalisation, Oslo will benefit as trade in goods and services will flow. The country, as a whole, will expect to experience a boom to go with their technological innovation. Norway is ranked 1 out of 189 countries and territories on the Human Development Index – indicating that the quality of life is the best in the world. Hence, the government does not need to focus so much spending on areas such as health, pensions and education. However, providing services in rural areas has long been an issue of concern, and as is the case with other highly developed countries, Norway’s population is ageing. The view is that Norway is a very expensive country to visit, and this is because there are small differences in salaries so, the Storting’s improved economy is unlikely to go toward making the country ‘cheaper’ and more accessible to tourists, but to expanding transport links, planting key settlements in sparsely populated areas and reducing the ageing population. The latter of which can be achieved by raising retirement age, increasing income tax and increasing the importance of the private sector providing healthcare and pensions. On the other hand, these actions will reverse what makes Norway so appealing.

However, after a while the technology will no longer be new and fewer opportunities for growth will exist. Norway will have still been brought closer to Europe and seen an increase in both FDI (foreign direct investment) and inward investment. Resources such as oil are highly priced and in constant demand. The ease of route will mean less crew are needed on ships, less fuel is used on travel, oil is moved faster and all these impacts lead to a drop in oil price. Oil price decreases are generally thought to decrease inflation and spark economic growth. The supply of other goods made with petroleum (plastics, perfume, rubber etc) will also increase and the cost of production will decrease. This is of benefit to Norway but not so much to developing countries which rely on this oil. The poorer the oil importing countries, the bigger the problem – if manufacturing petroleum products, they are forced to sell them for less, whilst competing for the oil with other countries who are witnessing the appeal to buy cheaper oil.

Where does this tangled web end? Oil is finite. When the resource runs out or the world has its eyes on a cheaper, more environmentally friendly alternative, Norway will see much decline. Regeneration and rebranding will be needed, as well as a shift from the primary sector of resources to manufacturing, services or research.

All capitalist countries go through a series of interconnected cycles of economic change (Kondratieff), 50-year sequences of booms and recessions. In the inevitable, recession in the far future, the more educated will cope more successfully than those with only basic qualifications and so long as Norway diversifies its economic base, it will retain a good level of wealth and standard of living.