Equinor and its partners have received permission to increase gas exports from two fields on the Norwegian continental shelf to supply the “tight European market”.
Enhanced production permits were authorised by the Ministry of Petroleum and Energy for the Oseberg and Troll fields. They have both been increased by one billion cubic metres for the gas year starting 1 October.
Helge Haugane, senior vice president of gas and power at Equinor said: “The production permits allow us to produce more gas from these two important fields this fall and through the winter. We believe this is very timely as Europe is facing an unusually tight market for natural gas.”
Meanwhile, US liquified natural gas (LNG) exporters plan projects to capitalise on European shortages – even as the Biden administration insists that the goal remains to “transition away” from the fossil fuel, The Financial Times reports.
This follows a comment made by Amos Hochstein, a senior US energy adviser, after he had visited Kyiv and said that “lives are at stake” over Europe’s low gas stockpiles and the threat of reduced supply.
He told The Financial Times that the current crisis “demonstrates the concern that we have had for so many years around the supply into Europe,” and that Russia was not doing all that it could to alleviate the market blowout.
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Russia has been sending less gas to Europe, for reasons debated in the industry which include Russia’s need to refill its own storage to the suspicion that it is trying to pressure European governments, including Germany, to approve the start-up of the highly controversial Nord Stream 2 gas pipeline.
The UK and parts of continental Europe rely more on wind turbines for electricity generation, but still weather in recent weeks has slashed wind’s contribution to the grid. This has led to higher use of natural gas, therefore boosting demand for the fuel.
Hochstein highlighted the importance of maintaining a “reliable and affordable” supply while transitioning away from fossil fuel. “It is a complex balancing act,” he said.
However, whatever transition in energy demand takes place in the longer term, LNG developers say the fear of shortages now underscores the need for more American gas on global markets.
Analysts remain cautious, however, saying that despite today’s global shortages, financiers and buyers must still be willing to bet that demand for LNG.
Alex Munton, an analyst at energy consultancy Wood Mackenzie told The Financial Times: “Never before has US LNG looked this good. but it’s not that simple when you get into the detail.
“Society and policy is trying to point them away from putting a 20-year gas contract on their books. They’ve got to sell it to investors who are basically saying: ‘what are you doing? You should be getting into wind’.”