Gas, record exports for Norway with sanctions on Russia
There is someone in Europe who is making a fortune from gas. Thanks also, or perhaps above all, to Western sanctions against Russia. That someone is Norway. Natural gas supplies from Oslo could be set to reach a new record during 2024, also because the Norwegian government is working to reduce the maintenance schedule of its plants.
“We could get higher volumes than last year,” Helge Haugane, senior vice president for gas and energy at Norwegian energy giant Equinor ASA, said in an interview with the German press. “In 2023 there was a lot of maintenance, in 2024 there will be less.” Success doesn't happen by chance. The data seems to communicate that Norway has certainly gained, at least on the economic and energy front, from the war in Ukraine and the resulting total rupture between the West and Russia.
Norway has in fact become the main European supplier, having exported around 109 billion cubic meters of gas natural gas on the continent in 2023. The country's importance to Europe's energy security became clear last summer, when unplanned work at some plants roiled markets, just as the region was rebuilding its energy mix after the loss of a large part of Russian gas pipeline flows.
Norway is also supplying more oil to its neighbors, replacing embargoed Russian oil. For the whole of 2022, Norwegian pipeline exports amounted to 113 billion cubic meters, an increase of almost 4.5 billion cubic meters compared to the previous year. Norwegian giant Equinor has been working to increase capacity at its plants, including reducing bottlenecks at Kollsnes, which has “increased capacity from 144 million cubic meters per day to 156,” Haugane said.
Equinor is also building its liquefied natural gas portfolio, having signed two agreements for the purchase of fuel from Cheniere Energy Inc. and for the sale of super-chilled fuel to India's Deepak Fertilisers. The growth in demand will come not only from Europe, but also from countries that want to replace coal with gas. For example, we are focusing with conviction on India.
Boom in extraction, despite protests from environmentalists
Norway used the favorable contingency in two ways. The first: stop the rhetoric of abandoning fossil fuels as quickly as possible. Instead, it increased gas production as much as possible, even suppressing union strikes to keep the energy flowing. The second, obviously, by increasing exports to European neighbors both from a quantitative and cost point of view.
The sums flowing north are proving “embarrassing”, the British weekly The Economist even wrote in 2023, also launching a torpedo at Oslo: “A place that values its image as a force for good in the world must reject accusations of war profiteering.”
The Scandinavian country should be able to maintain its high gas flows to Europe in the coming years. In 2020, the government put in place temporary tax changes to ensure the pandemic did not halt investment in the sector. These incentives have led to an explosion of new drilling and development, worth an estimated $43 billion. An oil and gas company based outside Oslo, Aker BP, plans to invest $19 billion to increase production by a third by 2028.
Norway plans to nationalize most of its pipeline network when many existing concessions expire in 2028, to tighten control over key infrastructure. To meet the increased demand, the Norwegian government is asking energy giants to increase projects exploration to extract oil and gas in remote regions such as the Barents Sea, despite protests from environmental groups.
