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Sunday, June 23, 2024

Norway will profit on EU’s gas cuts

The Norwegian government was quick to declare that it would support the EU Commission’s decision this week to cut gas consumption by 15 percent from August 1. The goal is to make the EU far less reliant on gas from Russia, backed by reliable gas supplies from Norway on which the country profits greatly.

Norway is keen to keep exporting gas to Europe, here from the Melkøya plant outside Hammerfest. PHOTO: Møst

“Norway supports the EU’s work to make itself independent of imports of Russian energy,” state secretary Elisabeth Sæther told news bureau NTB. She added that Norway had agreed with the EU to “strengthen cooperation … to ensure access to gas resources in both the short- and long term.”

The EU Commission adopted a plan on Tuesday that involves voluntary cuts in gas consumption by EU members of 15 percent. The cuts, which amount to around 45 billion cubicmeters of natural gas, have been prodded by “considerable” concern within the  EU over energy supplies this winter, and that all Russian gas supplies may be cut off.

Russia is known for using its gas as a political weapon, even though cutting its gas exports to Europe will cost Russia itself. It seems to be more important for Russian President Vladimir Putin to continue his war on Ukraine, despite its own high costs both in terms of money and human life.

Russia has been the largest supplier of natural gas to the EU, with Norway as the second-largest, sending up to 120 billion cubic meters of gas to the European continent. Norway is now motivated to boost its own production to help offset the loss of Russian gas, which amounted to around 150 billion cubic meters. Norway is also profiting enormously on record high gas prices, but cautions that there are limits as to how much natural gas Norway can produce.

Norway is already sending natural gas to the EU, from here at the Melkøya facility outside Hammerfest and elsewhere. The goal is to send as much as possible, so that the EU won’t need to rely on gas exports from Russia. PHOTO: Møst

All the gas from state oil company Equinor’s newly restarted Melkøya gas plant, tied to the Snøhvit field off Northern Norway, will now be shipped via LNG carrier to Europe along with gas from other offshore fields. Prices are also highest in Europe, so Equinor itself will continue to profit handsomely from the exports.

Norway can’t fully offset the loss of Russia’s gas, though, making the consumption cuts in Europe necessary. They’ll be voluntary, however, since several EU members refused to commit to all the cuts needed. Both energy analysts and top politicians have been warning that energy shortages and even rationing loom this winter, a direct result of Putin’s decision to invade Ukraine in February and create a new international crisis in the process.

Europe continues to support Ukraine’s battle to preserve its sovereignty and its democracy. While Ukraine is paying a high price in terms of wartime destruction and lost lives, Europe faces high prices for energy. The voluntary 15 percent cuts in gas consumption will run from August 1 through March of next year and will involve everything from lowering thermometers this winter, installing energy saving devices and switching from gas back to other forms of energy like coal and nuclear power, even though that’s at odds with climate and environmental goals.

Russia’s Gazprom is already cutting the flow of gas through the NordStream1 pipeline to just 20 percent of capacity, sending gas prices even higher. The Norwegian government responded that “our friends in Europe” can rely on getting as much gas as possible from Norway. Norwegian oil and gas fields will be ramping up production, but still won’t be able to fully make up for the threatened loss of Russian gas.

Both the EU and Norway, meanwhile, have been determined to maintain solidarity and support for Ukraine and sanctions against Russia, which has fallen into what one energy analyst in Oslo called “a pure dictatorship” under Putin. There’s ongoing debate in Norway, however, over its electricity exports to the European continent and the UK, with the Center Party at odds with its own government partner, Labour, in wanting to ensure Norway’s hydro-electricity supply and bring down high electricity prices at home before sending it out of the country. Berglund



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