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    Winning with Gas: Equinor

Summary

The Norwegian state company is making the most of its gas, as the European energy transition gathers momentum.

by: William Powell

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Winning with Gas: Equinor

Norwegian state producer Equinor received around $26bn from its gas sales last year, an increase of 29% on the year before, it said February 21 at a seminar in London. Although Norwegian exports were roughly flat and Equinor made no major acquisitions, the gas price was higher.

As more countries prepare for the energy transition, Equinor sees strong market opportunities for gas and expects global demand to grow by around 10% towards 2030. However, the outlook, observers say, is uncertain beyond that point, as there are too many variables, such as the cost associated with decarbonising gas; the success gas will have as a bunkering fuel; and the take-up of gas in power generation.

Equinor is the largest producer of natural gas on the Norwegian continental shelf and the largest gas supplier to Europe after Russian Gazprom. In addition to its own gas, Equinor markets and sells gas on behalf of the Norwegian state’s direct financial interests (SDFI), an entity known as Petoro.

The company also has a significant gas portfolio outside Norway. At a gas seminar in London, Equinor outlined its gas position as well as its long-term market outlook.

“Global energy markets are changing. The world needs more energy, but lower emissions. Natural gas is well positioned to provide secure, competitive and sustainable energy to consumers and industry: Reducing CO2 emissions by half when replacing coal; providing needed back-up to renewables; and offering a long-term solution for the low carbon future if converted to hydrogen,” said Irene Rummelhoff, Equinor’s executive vice president for marketing, midstream and processing.

In total, Norwegian gas provides about a quarter of Europe’s gas. A well-developed and efficient gas infrastructure and proximity to the market make Norwegian gas highly competitive, with the UK and Germany as the largest export markets.

“The UK has successfully reduced its CO2 emissions by more than one third – to levels since the late 19th century – using gas, renewables and other measures. We are also encouraged by the policy signals from Germany on the role of gas in phasing out coal and look forward to continue working with our partners across Europe to realize the full potential of the energy transition,” said Rummelhoff.

In an energy scenario consistent with the 2 °C climate target, global gas demand would only be slightly lower than today even in 2050. That entails massive needs for investment in future gas supply in the decades to come. Equinor is actively exploring for gas on the Norwegian continental shelf.

In 2018, Equinor sold a total of 100bn m³ worldwide and changing markets also introduce new commercial opportunities on the trading side. As more LNG and intermittent renewables enter the market, Equinor is preparing to capitalize on increased price volatility.

“The traded gas markets are developing rapidly and a key to success will be agility and ability to respond quickly to price fluctuations. The demand for shorter dated indices is increasing and our response is to reflect this development in our trading,” said Tor Martin Anfinnsen, Equinor’s senior vice president for marketing and trading.

Earlier this year, it completed its purchaae of spot trade gas and power specialists Danske Commodities, which in 2017 traded the equivalent of a third of Norway's gas production.

The gas seminar for analysts and investors can be watched on a webcast.