Germany's coal phase-out plan a boost for Norwegian gas -lobby group

OSLO (Reuters) - German plans to phase out coal by 2038 will boost demand for Norwegian gas, the Nordic country’s oil and gas lobby said on Monday.

Germany should shut all its coal-fired power plants by 2038 at the latest to help to meet carbon emissions targets, a government-appointed commission said on Saturday, paving the way for the expansion of renewables and gas-fired plants.

Norway, Europe’s second-largest gas supplier after Russia, has long been calling for the EU and its key buyers to provide it with clear signals about the future for gas so it can make adequate investments.

“This is a very strong signal that demand for gas in Germany will increase, and that there will be also a stronger demand for Norwegian gas,” Karl Eirik Schjoett-Pedersen, the head of Norwegian Oil and Gas Association, told Reuters.

“It’s the signal for the companies to invest more in gas production.”

Norway’s largest oil and gas firm Equinor has already said it would focus on natural gas in its exploration on the Norwegian continental shelf.

Irene Rummelhoff, Equinor’s executive vice president in charge of downstream operations and trading, said gas was the only viable alternative to replace coal, and therefore she expected demand for gas in Germany to increase.

She spoke to Reuters ahead of the announcement of the proposal on phasing out coal.

However, not everybody in Germany welcomes the idea of gas replacing coal.

“We don’t want a climate-damaging gas boom to replace coal, as offered by Norway’s Equinor. We want climate friendly energy generation...,” Lisa Badum, a Bundestag member and a climate spokeswoman for the Green group, told Reuters by email.

In 2018, coal had a 38 percent share of German power generation versus just 7.4 percent for gas.

Norway exported 47 billion cubic meters of pipeline gas to Germany, or around 40 percent of its total pipeline exports in 2018, gas system operator Gassco said.

Norway’s gas output is expected to remain broadly steady until 2023, but could drop afterwards if no new large finds are made, projections from the Norwegian Petroleum Directorate show.

Reporting by Nerijus Adomaitis; editing by David Evans