EXPLAINED: How much gas does Norway produce?
Norway has overtaken Russia as the country Europe relies most heavily upon for natural gas. With rising energy prices and fears of power shortages this winter, The Local looks at how much gas Norway can produce.
Norway has long been a leading exporter of energy to Europe, even before the Russian invasion of Ukraine.
Prior to the invasion, it was Europe’s second-largest supplier of natural gas. Since the invasion and cuts to Russian gas, it has become the leading supplier.
Throughout the summer, gas production in Norway has continued to run at maximum capacity, compared to typical years where it will ramp down output to allow maintenance to be carried out.
Gas exports, which contributed to a record trade surplus in August, are expected to increase by around eight percent this year, oil and energy minister Terje Aaland told parliament last month.
As a result of the increased production, the Scandinavian country will produce approximately 122 billion cubic metres of gas. In 2021, the country produced a record 115 cubic metres.
Will Norway produce enough gas to cover Europe’s gas needs?
The answer, in short, is no. Before the conflict in Ukraine, Norway covered between 20 and 25 percent of the EU’s and Britain’s gas needs. In comparison, 45 to 50 percent was provided by Russia.
Even with maximised production, Norway will be unable to provide the EU with all the energy it typically needs.
Also, the country will unlikely fill the shortfall by exporting energy produced in other ways. The country has also looked into the possibility of limiting power exports due to concerns over its energy supply.
Hydroelectric dams meet almost all of the Nordic country’s domestic energy needs. However, Norway’s water reservoirs last week were only 68,5 percent full, 12 percent lower than average, after two years of low rainfall, according to the Norwegian Water Resources and Energy Directorate (NVE).
Are there any other ways Norway can help Europe with gas concerns?
Across Europe, there have been calls for Norway to agree or implement a maximum price cap on gas to keep energy affordable.
However, PM Jonas Gahr Støre has said he is sceptical about the prospect of a price ceiling.
We approach discussions in an open spirit, but we are sceptical of a maximum gas price”, Prime Minister Jonas Gahr Store said in a statement following a phone call with European Commission President Ursula von der Leyen earlier this week.
Concerns over the security of the gas supply if a price cap is introduced are one of the key explanations why the country appears unwilling to adopt a gas price.
One solution that the gas companies and the PM appear open to is longer-term gas agreements with European partners. The hope is that this will stabilise prices without manipulating the market or threatening the security supply.
READ MORE: Norwegian PM ‘sceptical’ on gas price cap
How much money does Norway make from gas, and what does it do with the revenues?
In August, the country exported around 176 billion kroner’s worth of gas. Sharp rises in gas prices mean a significant windfall for Norway. The state’s oil and gas revenues are expected to smash last year’s record
830 billion Norwegian kroner ($83 billion), potentially reaching 1.5 trillion in 2022 and 1.9 trillion next year, according to projections by Nordea Markets.
Revenues generated by oil and gas via taxation and drilling licenses go into the Government Pension Fund, the largest sovereign wealth fund in the world. In simple terms, the Government Pension Fund, or oil fund, is a giant savings pot that makes its money by investing in more than 9,000 companies all over the globe.
Government spending is drawn from the oil fund, and revenues from the Government Pension Fund account for around 20 percent of the annual budget.
READ ALSO: What does Norway do with its oil money?