Gas giant Norway pledges to work with EU to reduce price pain

Gas giant Norway pledges to work with EU to reduce price pain

15 Sep    Finance News

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OSLO — Norway said on Thursday that sky-high gas prices were not in its interest and it would work with the EU to steady the market, although Europe’s biggest supplier of piped gas is already at capacity trying to fill a gap left by Russia.

The European Union is grappling with the impact of soaring gas prices that have driven up inflation, pushed some utilities to the brink and threatened recession, prompting urgent proposals by its executive to protect consumers and businesses.

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“It is not in Norway’s interest that we have these extraordinary gas price spikes,” Prime Minister Jonas Gahr Stoere told reporters after meeting gas companies to discuss ways to bring down the price at which Norway sells to Europe.

Since Russia cut flows to Europe, Norway has become the region’s top piped gas supplier, with Moscow blaming the reductions on technical issues caused by Western sanctions over its invasion of Ukraine.

Norway is expected to produce some 122 billion cubic meters of gas this year, according to official forecasts in May, an increase of 8% from 2021 as producers raised gas output as much as possible to meet rising demand.

Stoere’s talks included long-term supply contracts with energy companies, who said they are willing to sign such deals, but need to know who the counterparties would be.

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“At today’s price level, it’s too big a risk to take for most private players,” Oeyvind Eriksen, Chair of Norway’s second-largest gas producer Aker BP told reporters.

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“So it’s partly a question of pricing mechanisms and partly how states and companies can work together to solve this very serious situation,” Eriksen said, adding that talks would continue and that there would be a solution.

“But it is too early to say what kind,” he said.

Equinor, Norway’s top gas producer, described Thursday’s meeting as “useful” and said it was important to have contact with the government about Europe’s energy crisis.

It added it sold about half of its gas via bilateral contracts and the other half on the spot market.

Gas prices have risen tenfold since early last year, sharply boosting Norway’s export revenues, but creating havoc for energy companies caught in the maelstrom.

EU energy ministers will try to approve new measures to reduce gas and power prices at an emergency summit on Sept. 30 and have asked Norway, which is not an EU member, to help.

Norway and the EU have agreed to form a taskforce, both sides said on Wednesday, with the Norwegian delegation led by the country’s EU ambassador, the prime minister’s office said.

(Reporting by Nora Buli and Nerijus Adomaitis; Writing by Gwladys Fouche; Editing by Terje Solsvik and Alexander Smith)

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