Norway's Equinor to take Shell stake, operatorship of Linnorm gas discovery

Norway's state-controlled Equinor said Dec. 14 it had agreed to take Shell's 30% stake in and operatorship of the undeveloped Linnorm gas discovery in the Norwegian Sea, the biggest undeveloped gas find offshore Norway.

In a statement, Equinor -- which already has a 20% stake in the license area containing the discovery -- said it would further mature work to develop Linnorm with a view to supplying gas to the European market.

Under the agreement, Equinor is to take Shell's 30% interest in the license area PL255, which includes the Linnorm discovery, conditional upon taking over the operatorship from Shell.

The deal is expected to close during the first quarter of 2024.

"Through this acquisition Equinor will deepen our position in the Halten area, in line with our strategy to optimize our portfolio on the Norwegian Continental Shelf," Equinor E&P vice president Kjetil Hove said.

Shell, meanwhile, said the deal did not impact its ambition to maintain a material upstream position in Norway and contribute to the development and transition of the NCS.

The partners in PL255 are Shell 30% (operator until the transaction is completed), Petoro 30%, Equinor 20%, and TotalEnergies 20%.

The Linnorm discovery was proven in 2005 and is the largest undeveloped gas discovery on the NCS, Equinor said.

It is estimated to contain around 25-30 Bcm of recoverable gas resources. As a comparison, this is more gas than remaining reserves in each of the producing fields Aasta Hansteen, Martin Linge, and Gina Krog.

"A lot of good work has already been done to mature Linnorm. Together with our partners, we will build on this and develop the Linnorm gas resources for the European market," Equinor's Hove said.

Reliable supply

Norway is now the biggest single supply source to Europe after Russian pipeline exports were curtailed through 2022, with deliveries currently running close to capacity.

Reliable Norwegian supplies to Europe and the UK this winter -- with almost no planned maintenance now expected before February 2024 -- will be key to meeting higher seasonal demand.

European gas prices remain relatively high, which is also driving producers to keep production at a maximum.

Platts, part of S&P Global Commodity Insights, assessed the TTF month-ahead price on Dec. 13 at Eur35.60/MWh.

Total Norwegian pipeline exports for the year to date remain well down on last year's flows, although November saw a sharp jump in deliveries.

Deliveries in the first 11 months of 2023 totaled 94.1 Bcm, almost 9 Bcm lower year on year, according to S&P Global data.

Exports were sharply curtailed throughout the summer on the back of heavy planned and unplanned maintenance work, with some turnarounds extended numerous times.

The heavy summer maintenance schedule was made necessary after work was deferred because of the pandemic in 2020 and 2021 and the pursuit of sustained high Norwegian gas output during the energy crisis in 2022.