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Norway's Equinor expects 'quite volatile' winter gas market: CEO

Highlights

Storage levels high, but numerous 'variables' around market

Points to loss of flexible supply, uncertainty on LNG, renewables

Barents Sea gas pipeline plan to require more resource discoveries

  • Author
  • Nick Coleman    Stuart Elliott
  • Editor
  • James Leech
  • Commodity
  • Energy Transition LNG Natural Gas

Norway's Equinor expects Europe's gas market to be "quite volatile" through the coming winter despite high storage levels, the CEO of state-controlled Equinor, Anders Opedal, said Oct. 18.

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Speaking at the Energy Intelligence Forum, Opedal said Europe now had less ability to increase or reduce gas supply at will, dependent on demand, compared with the past.

The giant Groningen gas field -- previously a source of highly flexible gas production for Europe -- has now been shut down while Norwegian production is likely to be maxed out over the winter. Norway has become Europe's largest single gas supplier in the wake of the collapse of Russian supply.

Opedal also pointed to the continent's dependence on global LNG markets, and fluctuations in renewable power output.

Opedal said the weather was "the most important element at the moment," adding: "We know that the gas storage is quite good at the moment and that Europe is in a much better place than last year, but there's a lot of variables around the gas market at the moment."

"Some years ago, Europe could really turn up and down the production dependent on the demand... Europe is not in that place at the moment," he said.

"For Norway, we will do everything we can to make sure that we maximize the gas we send through the pipes, but Europe will be dependent on LNG supply," he said, pointing to Asian competition for supply.

"Then we have the weather, how much electricity renewables produce etc. It's so many variables. For us we spend time understanding all these variables and seeing how they're changing, and we actually expect the gas market to be quite volatile over the winter," he said.

EU gas storage sites filled quickly over the summer and are now at 98% of capacity, according to data from Gas Infrastructure Europe.

European gas prices have already been volatile in recent months following extended Norwegian gas field maintenance, the threat of strikes in the Australian LNG sector, and more recently geopolitical concerns.

European gas prices spiked in early October as the market was rattled by the Israel-Hamas war and suspected deliberate damage to the Balticconnector gas pipeline between Finland and Estonia.

Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price on Oct. 17 at Eur48.79/MWh, up by 28% since the start of October.

Barents pipeline

Opedal was also asked about proposals to build a gas pipeline connection south from the Barents Sea to connect with existing infrastructure in the Norwegian Sea, and said more exploration was needed to increase the resource base before such a connection could be justified. The proposal has been put forward by state pipeline operator Gassco, and received backing from Var Energi, majority-owned by Italy's Eni, in April 2023.

"At the moment we don't see we have enough resources to really build a pipeline so we are very happy the Norwegian government put out more acreage for exploration, particularly around existing infrastructure," Opedal said.

Norwegian authorities are currently assessing license applications from 25 companies under an annual process known as the Awards in Predefined Areas, with awards expected early in 2024.

"This pipeline the Norwegian government is looking into it, we are in support of it, but it will be about the resource base that would have to trigger something like that -- we are not in that place at the moment," Opedal said. "Obviously, [with] new infrastructure in the Barents Sea you have a cost and we need to find very cost efficient ways of doing it."