Equinor, partners see initial losses from Norway CO2 storage despite government subsidies

OSLO (Reuters) - Norway's Equinor EQNR.OL and its partners Shell RDSa.L and Total TOTF.PA will lose money on the first phase of a carbon dioxide (CO2) storage project off Norway despite government aid, the head of the project told Reuters.

FILE PHOTO: Equinor's flag flutters next to the company's headquarters in Stavanger, Norway December 5, 2019. REUTERS/Ints Kalnins/File Photo

The Norwegian government said on Monday it would provide 16.8 billion crowns (1.40 billion pounds) in financial support for the project, called Northern Lights, and two onshore CO2 capture plants to advance the technology vital for reducing greenhouse gas emissions.

“We are very pleased with the announcement from the government. It’s a historic decision and a game changer for carbon capture and storage,” Equinor’s Sverre Johannesen Overaa, who heads the project, told Reuters on Tuesday.

The Northern Lights project would be able to store 1.5 million tonnes of CO2 in the first phase, which is estimated to cost 6.9 billion crowns. The government is expected to cover about 80% of that.

“We are losing money on the first phase, but have strong belief that we will be able to create a working business within a few years,” Johannesen Overaa said.

The project is expected to be close to break-even when storage utilization reaches its full capacity of 5 million tonnes per year, he added, though he did not specify when that could be reached.

The planned storage facility already had at least 11 potential customers, he added, including two in Norway, and could sign binding agreements with some next year.

Sweden’s largest refiner Preem has said it could store up to 500,000 tonnes of CO2 per year at the Norwegian storage plant from 2025, in addition to some 800,000 tonnes expected from two sites in Norway.

The Northern Lights project had indicated in the market that customers could be charged a fee of 35-55 euros per tonne of CO2.

“I think by 2030 we should hopefully see that it is operating as a regular business,” Johannesen Overaa said.

Reporting by Nerijus Adomaitis; Editing by Jan Harvey