Europe Needs Norwegian Gas Like Never Before, Gassco Believes

Europe Needs Norwegian Gas Like Never Before, Gassco Believes
The war in Ukraine, imbalanced European energy market, and a large degree of geopolitical uncertainty have generated all-time high demand for Norwegian gas.

The war in Ukraine, an imbalanced European energy market, and a large degree of geopolitical uncertainty have generated all-time high demand for Norwegian natural gas.

Gassco, a Norwegian state-owned company that operates 7,800 kilometers of natural gas pipes, said that it exported a total of 116.9 bcm through pipelines to Europe in 2022. Germany represents the biggest increase, by importing 11 percent more natural gas from Norway than the previous year.

“The year 2022 has, in all clarity, demonstrated how important Norwegian natural gas is and will be as a reliable energy source to Europe. We usually deliver less gas during the summer months than in winter, but last year’s exports were at a near-winter level all the year through,” says Frode Leversund, CEO of Gassco.

Norway has by far been Europe’s biggest supplier of natural gas throughout a turbulent 2022. Its export ensured secure, and highly demanded, deliveries of gas to Europe.

“At the same time, the demand for more renewable and cleaner energy, at the expense of coal, has rendered European countries more vulnerable. The war in Ukraine has led to an increase in the demand for stable and reliable deliveries of natural gas, and the production of Norwegian gas is vital for meeting Europe’s energy needs,” Leversund says.

Biggest increase in exports to Germany

Norwegian natural gas exports through pipelines to Europe totaled 116.9 bcm in 2022, nearly reaching the 2017 record year of 117.4 bcm. The biggest rise in exports was to Germany, which received nearly 54.8 bcm of gas. The energy quantity equals more than four times the annual hydroelectric power production in Norway and is an increase of 11 percent from the previous year.

“There has been extensive energy collaboration between Norway and Germany for many years, and we see that the rise in natural gas supplies from Norway throughout last year has contributed significantly to ease the pressure on Germany’s energy market,” Leversund says.

The German-Norwegian energy collaboration was further strengthened last year. The two countries have agreed to a feasibility study for establishing a hydrogen value chain. One of the subjects being evaluated is the pipeline transportation of hydrogen from Norway to Germany. The study is set to finish by the summer of 2023. Assuming such a value chain is found valid, work may commence in 2030.

High project activity

The activity level on the Norwegian continental shelf was high in 2022. A lot of it may be attributed to the fiscal relief package adopted by the Norwegian parliament in June 2021, to ensure activity and value creation within the oil and gas industry in times of low oil prices and the corona pandemic. This has enabled the European market to expect stable and secure deliveries of Norwegian gas for the foreseeable future.

The opening of the Baltic Pipe in September now ties Poland directly to the gas pipelines between Norway and continental Europe. The access to Norwegian gas may thus contribute to an annual emission cut of 70 million tons of CO2, provided gas replaces coal for power generation.

The gas transportation system will also contribute to strengthening the security of supply to both Poland and Denmark and other countries bordering the Baltic Sea.

To contact the author, email bojan.lepic@rigzone.com


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