Norway's Equinor defers 'significant' Norwegian gas volumes in Q2

London — Norway's state-controlled Equinor deferred "significant" Norwegian gas volumes in the second quarter due to very low European gas prices, as it pledged July 24 to continue to prioritize "value over volume" in Norwegian gas production..

Equinor can defer Norwegian gas production from its flexible fields -- Troll and Oseberg -- at times of low prices as it looks to benefit from higher prices later.

CFO Lars Christian Bacher told analysts on a conference all following the release of its Q2 earnings that the company was continually optimizing its Norwegian gas portfolio depending on prices.

Asked about Equinor's plans for Norwegian gas output over the remainder of 2020, Bacher said: "It is very, very difficult to answer because we are focusing on value over volume, and how much we're going to push out in time remains to be seen."

"And those decisions are made more or less on a daily basis, dependent on the price," Bacher added.

He said that if gas prices spike were to spike on any given day, then Equinor would act to "take advantage of that and then produce fully."

"We will continue to put value over volume and make active decisions to create value in demanding markets," Bacher said.

Q2 volumes

In Q2, Equinor's equity gas production in Norway was down 10% year on year at 644,000 b/d of oil equivalent. It was also well down on Q1's Norwegian output of 745,000 boe/d.

"Production was impacted by deferring significant gas volumes to later periods to capture higher expected value," the company said in its earnings report.

In Q2, Equinor said its average realized European gas price was down 59% year on year at $2.24/MMBtu mainly due to the "significant drop" in European gas prices.

However, its average realized price still compared favorably with the average NBP day-ahead price over the quarter of $1.60/MMBtu and the average day-ahead price at the TTF of $1.73/MMBtu, according to S&P Global Platts data.

Equinor added that the deferral of production "to create future value" would be a key factor in determining its output level over the remainder of the year.

Bacher also said renegotiations of gas sales contracts contributed to the Q2 adjusted results with a one-off effect of around $150 million, without going into detail.

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