Can Norway help Europe reduce reliance on Russian gas?

Norway, Europe's second-biggest supplier of natural gas, on Wednesday announced steps to keep its gas production at maximum levels to help Europe reduce its dependency on Russian gas.

a Norwegian gas platform in the North Sea
A file photo of a Norwegian gas platform in the North Sea. Photo: DANIEL SANNUM LAUTEN / AFP

The Norwegian Petroleum and Energy Ministry agreed to adjust the production licences of three offshore fields — Oseberg, Troll and Heidrun — so that they can prioritise gas production over oil.

The measures “will not increase the daily total Norwegian gas production significantly, but will contribute towards maintaining today’s high export volumes of Norwegian gas”, the ministry said.

Norway covers between 20 and 25 percent of the European Union’s and Britain’s gas needs, while Russia accounts for between 45 and 50 percent.

Since the Russian invasion of Ukraine on February 24, the EU has sought to reduce its Russian gas imports by two-thirds.

Norway’s gas exports are however squeezed by production capacities, already churning at maximum levels, and the distribution system via pipelines. 

Norway’s sole liquified natural gas (LNG) unit, which makes it possible to deliver gas by ship in liquid form, was damaged in a fire in September 2020.

Located in Hammerfest in northern Norway, it will be back in service by mid-May, according to its operator, energy giant Equinor, making it possible to then increase export volumes.

According to Equinor, adjusting the production licences at the Oseberg field will make it possible to export an additional 1 billion cubic metres up to September 30th, when maintenance work is scheduled to be conducted.

The Heidrun field will meanwhile be able to increase its deliveries by 0.4 million cubic metres in the full year 2022.

Equinor said that “1.4 billion cubic metres of gas meets the gas demands of around 1.4 million European homes during a year”.

The Troll field has meanwhile been authorised to increase its production by up to 1 billion cubic metres in the event of loss of production from other fields.

To take advantage of the record-breaking high gas prices lately, Equinor had already obtained an adjustment on the production permits for Oseberg and Troll last year.

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ENERGY: What Norway’s new grid rent model means for you

A new model for grid rent, the fee you pay the network for powering your home, will be adopted in Norway later this year. So, what will it mean for you, and will it help slash your energy bills? 

ENERGY: What Norway's new grid rent model means for you

Following a six month postponement, a new gird rent system will be adopted nationwide in July, the Norwegian government has announced

Grid rent is the charge consumers pay for receiving electricity into their homes. Under the current model, grid rent is typically anywhere between 20 to 50 øre per kilowatt-hour. Those in rural areas usually pay more, while those in cities pay less.

The new model will have a lower fixed proportion of the fee with a higher part of the charge linked to total consumption, meaning homes that use more power will pay higher grid rent, while those that consume less will have lower bills. 

The new model has been welcomed by the Norwegian Housing Association (NBBL). 

“Now we get a fairer grid rent, where those who load the power grid the most so that the need for development increases, pay somewhat more in fixed terms than those who use little electricity at the same time,” Bård Folke Fredriksen, CEO of the NBBL, told newswire NTB. 

“No one wants to pay for the neighbour to charge two electric cars simultaneously during the day, when it is entirely possible to charge slowly at night when there is good capacity in the power grid,” he added. 

Initially, the model was meant to be adopted in the new year, but a majority in parliament opted to delay the scheme’s introduction. 

“The goal of the new grid rental model is to facilitate the best possible utilisation of the transmission network and a more equitable distribution of costs between customers,” Minister of Petroleum Terje Aasland said in a government statement.

The government has said that, over time, the scheme would lead to lower grid rent for customers. 

“Power-based grid rental will provide incentives for efficient grid utilisation, which will result in lower grid costs for electricity customers, less encroachment on nature and fewer conflicts related to grid development,” Aasland said. 

A transition period of two years will be introduced, and the new consumption charge will only be allowed to account for 50 percent of grid companies’ revenues. The energy ministry will then assess the new model at the end of the transition peroid.