EC eyes additional Norwegian gas supply under new cooperation agreement

The European Commission and Norway on June 23 agreed to "step up" their cooperation in order to ensure additional gas supplies from Norway to the EU in both the short and long term.

In a statement, the EC said its Executive Vice President Frans Timmermans, energy commissioner Kadri Simson and Norwegian energy minister Terje Aasland recognized the urgency to act following Russia's invasion of Ukraine.

The officials "agreed to step up cooperation in order to ensure additional short-term and long-term gas supplies from Norway," it said.

They also agreed to address the issue of high energy prices, and to develop long-term cooperation on offshore renewable energy, hydrogen and carbon capture and storage, with a view to developing an "even deeper" long-term energy partnership.

Norway currently meets around 25% of EU gas demand, and its role has come into sharper focus since Russia moved to reduce gas supplies to Europe.

The EC said the parties agreed that the importance of Norway's oil and gas production for European energy security had increased further after Russia's "war of aggression" against Ukraine.

"Companies in Norway are currently producing gas at very high capacity," the EC said. "Given the high production levels seen in Norway in the first months of the year -- a trend that is anticipated to continue for the rest of the year -- there is strong potential for increased sales to Europe in 2022, bringing close to 100 TWh of extra energy to the European market."

That is the equivalent of an additional 9.5 Bcm of gas.

Five-year range

Norwegian pipeline gas exports to continental Europe and the UK remained at the top of the five-year range in May amid sustained high European prices.

Norwegian deliveries totaled 9.49 Bcm last month -- or an average of 306 million cu m/d -- with supplies at the top of the five-year range for the fourth consecutive month, according to S&P Global Commodity Insights data.

European gas prices have been at sustained highs since September 2021, first due to Russian supply constraints and concerns over storage, followed by a surge in prices after Russia's invasion of Ukraine on Feb. 24.

The Dutch TTF front-month contract was last assessed on June 22 at Eur127.75/MWh, up 55% since the start of the month and 335% higher year on year, according to Platts price assessments by S&P Global.

Norway's gas supply has been boosted in recent months by moves by state-controlled Equinor and others to divert gas usually used for reinjection for oil recovery for export to Europe.

Equinor has said it also plans to maintain higher gas output at its Heidrun, Oseberg and Troll fields through the summer after increased production permits were approved by the energy ministry.

Equinor's senior vice president for gas and power marketing and midstream, Helge Haugane, said last month that the company would be able to increase gas exports to Europe by more than 5 Bcm thanks to the new initiatives.

Norwegian gas production is also set for a boost after Equinor resumed LNG production at the Hammerfest export plant this month following a fire in September 2020 that forced its closure.

Hammerfest LNG is fed with gas from the Snohvit field, which was also shut in during the outage.