Gas export boom from Norway to Europe: the numbers
“Because Norway has to sell us its 120 billion cubic meters of gas a year at a much higher price than he was selling it for before the Russian invasion of Ukraine?” he asks Paul Scaroni in an interview with Repubblica, after the Norwegian sovereign wealth fund had opposed his appointment to the presidency of Enel. But is it really so? The data seems to confirm that Norway has certainly gained from western sanctions and in particular European towards the Russia.
While Russia reduced natural gas exports last year, Norway increased them and is now the main European supplier of this fuel. Norway is also supplying more oil to its neighbors, replacing embargoed Russian oil. For the full year of 2022, Norwegian pipeline exports amounted to 113 bcm, an increase of almost 4.5 bcm from the previous year.
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Norway has used the crisis in two ways. The first: stop the rhetoric of moving away from fossil fuels as quickly as possible. Instead, it has ramped up gas production as much as possible, even suppressing union strikes to keep the energy flowing. The second, obviously, by increasing exports to European neighbours, both from a quantitative and cost point of view.
Norwegian gas producers have been incentivized to maximize exports thanks to record gas prices in Europe. Platts, part of S&P Global Commodity Insights, assessed the Dutch reference price TTF month-ahead to the all-time high of 319.98 euro/MWh on 26 August. Prices have since weakened due to good storage levels and reductions in demand, but remain relatively high.
“Embarrassing prices” and nationalization of pipelines to maximize profits
The northward-flowing sums are revealing”embarassing“, the British weekly The Economist even wrote a few months ago, also launching a torpedo at Oslo: “A place that cares about its image as a force for good in the world must reject the accusations of war profiteering”.
In a normal year, oil sales, gas and electricity bring in more than $50 billion for Norway. But now, thanks to the war, Norway’s energy export revenues have soared at a rate of more than $200 billion. Were it not for the fact that Norway has decided to put this money away in a sovereign wealth fund, at these prices every Norwegian could receive an annual allowance worth about $40,000, roughly the EU’s per capita GDP. .
Norway has raised large sums of money for coming to the aid of Europe. But she certainly didn’t do it for free. As the New York Times explains, Petoro earned about $50 billion in 2022, nearly triple what he earned in 2021, and Equinor reported record adjusted profits of $75 billion.
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 didn’t halt investment in the sector. These incentives have led to an explosion of new drilling and development, valued at an estimated $43 billion. An oil and gas company based outside Oslo, Aker BP, plans to invest $19 billion to boost production by a third by 2028.
Norway is even planning to nationalize most of its pipeline network when many existing concessions expire in 2028, to strengthen control over key infrastructure. To meet the increased demand, the government Norwegian calls on energy giants to ramp up oil and gas exploration projects in remote regions like the Barents Sea, challenging a sense of frustration and anger among climate activists. About two-thirds of the country’s undiscovered oil resources are estimated to be located off the country’s northern coast in the Barents Sea in the Arctic.
Norway has said it will offer energy companies a record number of blocks for oil and gas exploration in the Arctic. Friends of the Earth Norway, WWF-Norway and Greenpeace Norway environmentalists called “embarrassing”, “extremely inconsiderate” and “insulting” the country’s lobbying in favor of a continued expansion of oil and gas.
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