After supplying Europe’s biggest economy with natural gas for more than four decades, Norway is preparing to defend its share as the world’s biggest producers all vie for a larger slice of the $21 billion market.
Russia began building a second giant pipeline to Germany and US President Donald Trump is turning up the rhetoric in an attempt to secure sales of liquefied natural gas.
To keep its roughly 25 percent share of German demand, Norway is counting on falling industry costs to spark new discoveries on its continental shelf, where just one third of the resources have been produced. Later this year, a new field will be hooked up to the nation’s pipeline network, a massive system long enough to stretch a quarter around the Earth.
“We strongly believe we will deliver gas to Germany for a long, long period,” Frode Leversund, chief executive officer of network operator Gassco AS, said at the Karsto processing plant last week. “What I need to do, as responsible for the Norwegian system, and what Norway needs to do, is to keep on developing projects and keep on developing volumes so we can be an important player also in 2040.”
Gas, the cleanest of fossil fuels, is becoming increasingly important as Germany plans to exit nuclear power in four years’ time and is shutting down more and more coal-fired plants. While renewable energy has taken a big chunk of the daily power output, with some days producing the majority of electricity, the nation still needs steady supplies for when the sun doesn’t shine and the wind doesn’t blow.
Germany used to import more than a quarter of its gas from the Netherlands. But Europe’s biggest field at Groningen is being gradually shut down after earthquakes in the area damaged buildings.
That has created a “big market opportunity for everybody,” according to Jonathan Stern, a senior research fellow at the Oxford Institute for Energy Studies. “Germany is the biggest market in Europe and the demise of Dutch gas is a key issue there,” he said. “A lot of the excitement is happening because of the decline.”
While Norway has managed to cut production costs “hugely,” according to Stern, it’s an issue that they haven’t found any significant gas deposits in the Barents Sea in the Arctic since the Snohvit field in the 1980s.