Norway’s Equinor ramping up gas output to help meet Europe’s demand
Norway’s state player Equinor and the country’s government have worked out a plan to maintain high gas exports to Europe and meet the demand amid supply concerns exacerbated by the Ukrainian crisis.
Equinor and its partners, together with Norwegian authorities, are taking new steps to meet the gas demand in Europe. With that in mind, the country’s Ministry of Petroleum and Energy has approved applications for revised production permits for the Oseberg, Troll, and Heidrun fields.
Increased production permits allow the high gas production from the fields to be maintained through the summer months, Equinor explained in a statement on Wednesday.
Kjetil Hove, executive vice president, Exploration & Production Norway, stated: “Our focus is to maintain safe and efficient operations on our facilities, remaining a reliable supplier of energy to the markets in Europe in a highly challenging situation. In close dialogue with the authorities and our partners we are now taking steps to maintain the high production level from the winter.”
As detailed by Equinor, the adjusted production permits from the Ministry of Petroleum and Energy allow the Oseberg field to increase its gas exports by around one billion cubic metres in the period up to 30 September. This is a 15–20 per cent increase for the current gas year, putting this year’s production at about 7 billion cubic metres.
For the Heidrun field, gas exports can increase by 0.4 billion cubic meters for the calendar year 2022, i.e., an increase of up to approx. 30 per cent.
Equinor said that 1.4 billion cubic metres of gas meet the gas demand of around 1.4 million European homes during a year.
Furthermore, the Ministry of Petroleum and Energy has approved the application from Equinor for an increase in the production permit to 38 billion cubic metres of gas for the Troll field for the current gas year. This increases production by 1 billion cubic metres, equivalent to an increase of slightly less than 3 per cent for the Troll field in this gas year, in the event of loss of production from other fields.
According to the ministry, Norway supplies 20-25 per cent of the gas consumption in the EU and UK and the Norwegian gas is delivered to Europe through an extensive network of subsea pipelines. The exception is the LNG plant at Hammerfest in Northern Norway, which is currently out of operation after a fire in 2020. When production is resumed, which is expected in mid-May 2022, this plant will add some additional gas into the global marketplace.
Gas is sold in a global market, where Norwegian production accounts for two to three per cent. The ministry believes that, in the near future, increased import of LNG to Europe will be crucial.
In an effort to accelerate production, Equinor has also decided to postpone turnarounds on the Oseberg field from May to September this year. This is based on a thorough evaluation of the plants’ technical integrity. Should needs for necessary maintenance still arise, this will be done during short turnarounds. The postponement results in a corresponding postponement of the Sture terminal turnaround.
In addition to increased exports, the adjustment of the permits also increases the robustness of the production on the fields exporting via the Kollsnes processing plant, as the Troll production can be increased by up to 1 billion cubic metres of gas in the event of loss of production on other fields in the area.
Planned turnarounds on four platforms on the Oseberg field in May will be postponed to September 2022. This will accelerate the production of slightly less than 500 million cubic metres from September to May.
Furthermore, once Hammerfest LNG comes on stream in mid-May, it will provide more than 6 billion cubic metres of gas per year from the Barents Sea.
As a reminder, due to the war in Ukraine, Equinor has recently decided to stop new investments into Russia and to start the process of exiting its Russian Joint Ventures. The Norwegian company has also decided to stop trading in Russian oil and oil products. This means that Equinor will not enter any new trades or engage in the transport of oil and oil products from Russia.
Previously, Shell’s decision to buy a cargo of Russian crude oil faced criticism despite being made with the security of supplies at the forefront of its thinking. Shell has since then apologised for the move and reiterated that the profits from the oil would go to a dedicated fund to help the people of Ukraine.