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INTERVIEW-Norway is near its maximum gas exports - operator
December 7, 2012 / 10:56 AM / in 5 years

INTERVIEW-Norway is near its maximum gas exports - operator

* Record gas export volumes expected for 2012

* Gas transportation system close to limit

* Major gas discoveries needed to justify new pipelines

By Nerijus Adomaitis

HAUGESUND, Norway, Dec 7 (Reuters) - Norway, Europe’s second-largest gas supplier after Russia, is nearing the limits of its exports as its pipelines are almost fully utilised and no major new fields are coming online soon, the head of its gas system operator Gassco said.

The Nordic country supplies about a fifth of the gas consumed in Europe and Britain has been increasingly dependent on Norwegian supply as its own reserves are falling by an average of more than five percent a year.

Norway’s gas exports will hit record volumes this year and then move sideways, Brian Bjordal, Gassco’s president and chief executive, said in an interview.

“This year, exports to Europe will be above 100 billion cubic metres (bcm)... It will be a record,” he told Reuters. But he added that the gas transportation system was operating close to maximum capacity, limiting further export growth.

Norway’s government projects its gas output for 2012 to rise to 107 bcm this year from 94.2 bcm in 2011, and to inch up to 110 bcm in 2013 and to 112 bcm in 2014..

Norway’s annual gas output is roughly equal to yearly demand in Britain, Europe’s biggest gas market.

While the Norwegian Petroleum Directorate has previously predicted gas sales peaking at between 105 bcm and 130 bcm in 2020, Bjordal was more cautious about the upper limit because of the total capacity of the existing pipelines that take gas to the UK, Germany, France and Belgium.

“The system can handle a maximum of less than 120 bcm,” the Gassco chief said.

Norway largely relies on pipelines to export its gas, but it also has a liquefied natural gas (LNG) terminal at Snoehvit, on the country’s north coast, which in November sent its first cargo to Japan via the Arctic.

Gassco operates the biggest integrated offshore gas system in the world, with more than 50 fields feeding gas through 8,000 km of pipelines on the seabed.

So far, no major expansion of Norwegian gas transportation capacity towards Europe is planned, as there are not enough major discoveries to justify building a new pipeline to the Barents Sea in the Arctic, where most newly found resources are oil, not gas, although more exploration is planned in the region.


Bjordal said Norway’s gas production was going at “full blast”, with no major additions coming online soon.

“At this point in time, the production system is more or less at its maximum. There are no fields that can introduce more gas.”

Norwegian government officials said this week the country’s exports would also depend on whether future European demand scenarios warranted the high investment needed for new capacity.

“For Norwegian gas producers, a clear signal from European policy makers on the role of gas in energy mix is important,” Ane Hansdatter Kismul, state secretary for oil and energy, said to the Norwegian-German energy forum.

A sluggish economic outlook as well as energy prices that favour coal-fired power generation over gas mean Europe’s gas demand outlook is not set to rise by much in coming years. ($1 = 5.6376 Norwegian crowns) (Editing by Henning Gloystein and Anthony Barker)

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