Norway throws importance of oil & gas for Europe’s energy security into stark relief
In the wake of the Ukraine crisis, Europe went into a tailspin, scrambling to strengthen its energy security and diversify its supply mix to avoid a gas crunch. One of the top oil and gas exporters, which stepped in to help alleviate Europe’s energy woes, was Norway. This enabled the country to become the continent’s largest gas supplier. The Norwegian government is adamant that additional investments in oil and gas are needed to keep bolstering Europe’s energy security.
Following the Ukraine crisis, the EU made a move to reduce dependence on Russian fossil fuel imports last year, by phasing out all Russian oil imports. During this turbulent time, Norway stepped up when Russian gas supplies were cut off, becoming Europe’s largest supplier of gas. Norway is also among the continent’s top three oil suppliers. Other main suppliers are the U.S., Saudi Arabia, Brazil, and Angola.
The director general of the Norwegian Petroleum Directorate (NPD) emphasised at the roundtable conference in Molde that Norway would be able to remain a stable supplier of oil and gas while contributing to Europe’s energy security over the coming years if it continues to develop the Norwegian Continental Shelf (NCS).
Torgeir Stordal, the NPD’s Director General, remarked: “Norway can be a stable exporter of oil and gas, and thus contribute to Europe’s energy security, for many years to come. With the authorities’ facilitation, gas producers on the Norwegian shelf joined in a considerable effort to deliver as much gas as possible to Europe in 2022. Norwegian gas is now a critical factor for European gas supplies and energy security.”
The 2023 Roundtable conference, organised by Energiknutepunkt Nyhamna (energy hub) in cooperation with the chambers of commerce in Aukra and Molde, looked at the geopolitical situation and the importance of Norwegian gas supplies to Europe. The audience included politicians and representatives from regional business and industry. While the production on the Norwegian shelf remains at a high level, it is expected to increase further over the next few years.
“There are several reasons for this. We actually have as many as 93 fields on the shelf. Fields that shut down are replaced by new ones at a steady pace, and older fields are producing both longer and more than previously expected. Gas production has remained at a stable high level for a number of years, and now accounts for more than half of total production,” highlighted Stordal.
Norway produced 122 billion standard cubic metres (Sm3) of gas in 2022, which represents an increase of eight per cent from the previous year. This increase corresponds to the gas consumption of one-third of all German households. The Norwegian gas production was 58.4 billion Sm3 in the first six months of 2023, which is about four per cent lower than last year, mainly due to maintenance at onshore facilities in the early part of summer. The NPD expects gas production to hold steady at the 2022 level for the next four to five years.
“These are big numbers, and this contribution from Norway has been extremely important for European energy security. The latest figures reveal that gas production remains high. Many question whether Europe will need all this gas in a longer-term perspective. What we know is that Europe’s own production will continue to fall in the years ahead. There will still be a significant shortfall even if demand declines, and this need will have to be met through imports. Norwegian gas is transported to Europe by direct pipelines, which makes this a very competitive solution,” underscored Stordal.
Furthermore, Stordal claims that the petroleum industry will still be large and important in 2040 even though production will gradually decline. Norway recently gave the green light for many new development projects. Positive investment decisions worth around NOK 300 billion (nearly $29.9 billion) were also seen in 2022.
“These decisions will ensure that Norway can remain a stable exporter of oil and gas, and thus contribute to energy security in Europe for many years into the future. If we want to maintain our role as a significant supplier over the longer term, we must continue to invest on the shelf, both in further development of fields, development of discoveries and exploration for new resources,” concluded Stordal.
According to Stordal, significant resources still remain on the NCS, as illustrated by a recent gas/condensate and oil discovery northwest of the Troll field. Therefore, more exploration should be carried out on the NCS to unlock its remaining hydrocarbon potential.