The country's PST intelligence agency on Monday said the Norwegian man was “formally suspected of providing information to a foreign country,” which it later confirmed was Russia.
“We have informed the Russian ambassador that an employee of the Russian embassy is undesirable as a diplomat and will be asked to leave Norway,” said a foreign ministry spokeswoman, Siri Svendsen.
She said the person had engaged in acts “not compatible with his status as a diplomat.”
The diplomat, who works in the embassy's trade section, has until the end of the week to leave the country.
It was not immediately clear if the diplomat was the same person who was with the Norwegian arrested at an Oslo restaurant on Saturday.
The 50-year-old Norwegian worked at DNV GL, a company that provides certification for insurance purposes for the shipping, oil and gas and renewables industries.
The company said the employee was in the “oil and gas sector” but “did not have security clearance and has therefore not worked on projects for the defence industry, the Norwegian Armed Forces or other governmental agencies where security clearance is a prerequisite.”
“At the time of his arrest, he led a joint industry project on 3D printing,” it said in a statement.
A judge on Monday ordered him held in custody for four weeks, the first two in isolation.
Court documents show that the man, identified as Harsharn Singh Tathgar, told investigators he had handed over information in exchange for “not insignificant sums in cash”, but had insisted the information was not harmful to the nation's interests.
The Russian embassy in Oslo did not immediately respond to a request for comment.
In its annual report published in February, PST warned of the risk of espionage in several sectors of society — political, financial, defence and research circles, among others — singling out Russia, China and Iran as particular threats.
In recent decades several spy cases have marred ties between NATO member Norway and Russia, which share a border in the Arctic Circle.