From Lithuania to the Netherlands, from Denmark to Poland, many countries that can no longer rely on Russian supplies are turning to the Norwegian gas giant Equinor, and Norway has lobbied for a favorable regime, writes Inside Over.

Why does Norway not want a cap?

• First, energy is the main source of state revenues of the country.
• Second, the assertion of geopolitical and security autonomy: Oslo, a founding member of NATO, believes it is doing its part in providing military assets to stop Russia and does not want to be branded.
• Finally, the country needs to recover from inflation and the energy crisis of the past few months, as “its $1.2 trillion sovereign wealth fund, which invests revenues from decades of oil and gas production, lost 14.4%, or $174 billion. the first half of this year is more than the government can earn from record oil and gas prices,” and therefore it is in Norway’s interests to restore them, the Financial Times notes.

Norway is “skeptical” about the possibility of limiting the price of gas imported from the European Union: Oslo claims that this measure will not solve the problem of supply to Europe, as noted by Prime Minister Jonas Haar Støre in a note published after a telephone conversation with the President of the European Ursula von der Leyen Commission.

“We agree to conduct an even closer dialogue with the European Union in the future regarding the various proposals that are on the table,” the Oslo government said.

“We approach the discussions openly, but we are skeptical about the maximum gas price,” explained Store, who heads the state that has become the first supplier of blue gold to Europe since the beginning of the Russian invasion of Ukraine.

Record sales for Norway

Norway’s oil and gas sales to Europe hit record levels last year before continuing to rise this year following geopolitical changes on February 24.

Norway plans to increase annual exports from 113.2 to 117 billion cubic meters. As for the European Union, Rystad Energy estimated that before the war in Ukraine, the Scandinavian country covered only 20% of the gas demand for the 27-nation bloc, compared to 40% for Russia.

After the increase in production, it is expected to deliver almost 90 billion cubic meters of gas to the EU this year, which is almost 25% of the total demand, and thus become its largest supplier.

In the case of the UK, imports of Norwegian gas could rise from 41% of total demand in 2021 to almost 50% in 2022.

Record profits / 18,000 euros/person

Obviously, all this brought significant profits to Oslo. In May, the Norwegian government predicted that revenues from oil and gas this year would already approach 100 billion euros.

In a country with 5.4 million inhabitants, this is equivalent to 18 thousand euros per person.

Since then, the price of gas has doubled and is currently trading at more than ten times the average level of the previous decade.

In August alone, Norway sold 13.26 billion euros worth of gas almost exclusively to the EU and Great Britain. Norway clearly has considerable fiscal leeway compared to the past, with oil and gas revenues of just under €30 billion last year.

“They should do more to help the EU” / A price cap is needed

Some oil and gas executives outside Norway say the wealthy Scandinavian nation must do more to help Europe ahead of a tough winter that could see many countries face both recession and record energy prices,” the Financial Times notes. .

Today, Norway seems to be selling oil at 400 euros per barrel instead of the usual 100 euros, and many players are demanding from Oslo a price cap that will further push Russian gas out of the market.

Støre has said several times in the past that the onus for any necessary price calming rests with companies such as Equinor, the Norwegian state-owned oil group that develops Norway’s oil and gas fields, and that they “must be responsible for making short-term and long-term deals with their European customers.”

Equinor chief executive Anders Opedal told the Financial Times that several European customers are interested in different gas supply options, including long-term contracts. “We are always open to discuss various gas supply arrangements, including long-term gas supply contracts,” he said.

Gas producers tend to prefer long-term contracts, often linked to the price of oil, because they give them more stable revenue streams and make it easier to plan investments. But over the past two decades, the EU has tried to move to gas hub-based pricing, such as the Dutch TTF contract, which is the European benchmark.

From Lithuania to the Netherlands, from Denmark to Poland, many countries that can no longer rely on Russian supplies are turning to Norwegian gas giant Equinor, and Norway shows no signs of letting up and continues to lobby to protect its revenues.

In addition, if Norway abandons the EU, it is difficult to imagine how such framework agreements can be concluded with countries such as Qatar, Algeria or Azerbaijan.

Sources: Inside Over, Financial Times