Norwegian natural gas exports have enabled the UK to phase out much of its coal production over the past couple of decades, but its a different picture for the rest of Europe.

Marc Oliver Bettzuge, professor of energy economics and director of the Institute of Energy Economics (EWI) at Germany's University of Cologne, said he is astonished that Norwegian gas does not figure prominently in European discussions about future energy imports.

“The European Union’s indigenous gas production is projected to fall by around 60 billion cubic metres over the next 20 years. This decline has to be replaced by increasing imports if EU demand were to remain at the current level.

"However,the debate in the EU mainly juxtaposes Russian gas and liquefied natural gas from the US and Qatar,” he told Upstream.

Bettzuge is surprised at "the level of caution" the Norwegian industry is showing with regard to new investments in exploration and gas infrastructure.

Moreover, he said, demand in Europe could potentially increase due to enhanced decarbonisation efforts if, for instance, Germany were to decide to phase out coal more rapidly.

“With an increase in gas demand, the EU import need could increase to 100 Bcm and beyond by the 2030s, which is quite a sizeable figure,” he said.

Bettzuge suggested Norway should review the possibility of increasing its gas exports.

“The debate about decarbonisation pathways for the EU and the associated energy security concerns should explicitly include the Norwegian option,” he said.

According to the Norwegian Petroleum Directorate (NPD), Norway has so far produced 2200 Bcm of gas, with another 2500 Bcm of producible gas discovered already, and a further 3800 Bcm yet to be found.

A large share of the yet-to-be discovered gas is thought to lie in the Barents Sea, far from existing infrastructure.

However, with Norway's existing gas transportation infrastructure at capacity until 2025, the country would either have to build new pipelines to Europe or increase its LNG capacity to gain a larger market share.

Bettzuge suggested it could be wise for Norway to increase its LNG capacity to hedge against supply and demand risk in the European gas market.

“It could be a reasonable option, especially in the Barents Sea, and it would add more flexibility for Norway,” he said.

Elnar Remi Holmen, state secretary at the Ministry of Petroleum & Energy, said Norwegian authorities want to ensure the best solutions are chosen for long-term production of oil and gas.

“Norwegian gas covers about 25% of Europe's demand. There are resources on Norway’s continental shelf to maintain production at a high level for decades to come. The level of production and further development of infrastructure depends on profitability evaluations,” said Holmen.

State-owned Gassco, the designated operator of Norway's gas export pipelines, believes the country can expand its export capabilities if there is enough demand.

“Currently we are near full capacity utilisation. However, it is possible to build more gas transport infrastructure and increase exports,” Gassco chief executive Frode Leversund said.

He stressed that further investments in gas infrastructure will probably depend on reassurance of Europe’s long-term import demand.

Leversund said Gassco continuously assesses the need for investments in Norway's gas infrastructure. “However, to realise the potential identified by the NPD, we need more exploration,” he added.

Despite the NPD’s high expectations for undiscovered resources in Norway, few significant gas discoveries have been made since Ormen Lange in 1997.

Tor Martin Anfinnsen, Statoil’s senior vice president in charge of trading and marketing, said Norway delivered record gas volumes to Europe in 2015 and 2016, adding that some Statoil fields can ramp up during winter peak demand.

“Where we do have flexibility is in our ability to route the gas according to price signals. The pipeline capacity from the Norwegian sector to the market is currently not a bottleneck — it is more than sufficient for our current and planned production,” he said.

Later this summer, however, Statoil will drill the Korpfjell wildcat in the Barents Sea, aiming for a giant gas reservoir close to the Norway-Russian maritime border. If successful, Statoil will need to decide between pipeline exports and LNG.

“If new gas discoveries are made in the Barents Sea, the export solution will depend on volumes discovered and market outlook,” Anfinnsen said.

“Provided certainty that there is a place for gas in Europe’s long-term energy mix, big volume discoveries could support a solution where Barents Sea gas is connected to the existing infrastructure for pipeline export to the continent and the UK.

"For smaller discoveries, and for big volume fields if long-term demand in Europe is uncertain, LNG solutions will probably be considered.”

Anfinnsen explained that in order to develop new gas discoveries, Statoil needs to be certain there is a long-term market.

“This means European policy-makers need to include gas as part of the energy mix towards a low-carbon future, along with renewables.”

He pointed out that the availability of gas should not be a point of concern.

“Pipeline gas will be available from Norway and Russia, plus from Africa and the Caspian region," he said.

"And LNG can be sourced in the global waterborne market to import terminals all over Europe. What is needed are long-term framework conditions that are signals to producers to continue exploration and development of new gas fields,” Anfinnsen added.

Leversund predicted there will be capacity for gas from the Barents Sea starting in the mid-2020s. “It will take eight to 10 years to have a pipeline in place from the Barents Sea to the existing infrastructure farther south. We can certainly handle potential gas supplies from the Barents Sea,” he said.

Statoil, meanwhile, wants clearer signals about future demand from European leaders.

“It takes years from exploration to production. We as a producer need to know that there is long-term demand for our gas. The same way individual countries need security of supply, we need security of demand,” Anfinnsen said.

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