Page 8 - EurOil Week 38 2021

EurOil COMMENTARY EurOil

Kwarteng also said that the Energy Price Cap However, the government has stressed that
mechanism would also help shield customers it will not provide an outright bail-out to failed
from high prices this winter, as will initiatives companies.
such as the Warm House Discount, Winter Fuel “There will be no rewards for failure or mis-
Payments and Cold Weather Payments. management,” Kwarteng said. “The taxpayer
“I am confident security of supply can be should not be expected to prop up companies
maintained under a wide range of scenarios,” he who have poor business models and are not resil-
said. ient to fluctuations in price. Secondly, custom-
It is not only the energy sector that is in tur- ers, especially and most particularly vulnerable
moil as a result of high gas prices. Other indus- customers, must be protected from price spikes.”
tries that purchase a lot of gas either as an energy He added that it was “absolutely vital that
source or as a feedstock for production have also the energy supplier sector remains a liberalised
come under strain. competitive market in order to deliver value and
US fertiliser manufacturer CF Industries good service to consumers.”
announced on September 15 that it had halted The minister also took aim at the UK’s
operations at its facilities in Billingham and Ince, dependence on fossil fuels, saying that if the
as it could no longer afford to pay gas bills. The country relied on less gas, the situation would
company uses gas to produce ammonia, the probably be better. The Johnson government has
main ingredient in fertiliser, in addition to pow- embarked on an ambitious decarbonisation pro-
ering its factories. gramme, but critics say Whitehall is not being
honest about the cost of this energy transition,
No rewards for failure or the risk it poses to energy security.
Energy suppliers have called for state support to “Thanks to the steps that we have made as a
help weather the crisis. Specifically, they want the government, renewable energy has quadrupled
government to cover the cost on taking on cus- in terms of gigawatt capacity since 2010, far more
tomers from firms that have gone bust, Reuters than quadrupled in fact – but there is clearly a
reported on September 20, citing sources. lot more we can do in this area,” Kwarteng said.
UK ministers are reportedly considering this Despite this sentiment, poor performance at
and other options, including the offer of state- the UK’s wind farms this year has been a con-
backed loans, underwriting the debt of suppliers tributing factor to the gas price spike, as this has
and even the creation of a so-called “bad bank” driven up demand for gas-fired power. A similar
to house customers that cannot be taken on by trend has been seen in Germany and other Euro-
other suppliers without their incurring losses. pean energy markets. ™

PIPELINES & TRANSPORT

Equinor boosts gas flow to Europe

NORWAY NORWEGIAN oil company Equinor will pro- Norwegian Continental Shelf [NCS].”
vide an extra 2bn cubic metres (bcm) of gas The Norwegian government sets output quo-
The boost should help supply for Europe from two key fields in the gas tas for Troll and some of its other large fields to
ease prices on the year beginning October 1, helping ease unprec- ensure that the country can maximise its output
European gas market. edented shortages on the market. of crude oil and natural gas over time. Equinor,
Gas price futures for October delivery at TotalEnergies, ConocoPhillips and state-owned
the Dutch TTF surpassed $840 per 1,000 cubic Petoro all have stakes in both Troll and Osberg,
metres last week, following a strong rebound in while Shell only has an interest in Troll.
demand in recent months coupled with supply Equinor recently announced the launch of gas
shortages. Norway is Europe’s second-biggest flow from Troll’s third phase – a project it expects
gas supplier after Russia, shipping 107 bcm in to be “one of its most profitable” ever, recovering
piped supplies last year. an extra 347 bcm of gas over the coming decades.
Equinor announced on September 20 it had The project cost NOK8bn ($924mn) to imple-
obtained the approval of authorities to ramp ment, but has a breakeven price of less than $10
up supplies from the Troll and Oseberg fields per barrel of oil equivalent (boe). ™
this coming gas year. Deliveries from Troll will
increase from 36 bcm to 37 bcm, while ship-
ments from Oseberg will be raised from 5 bcm
to 6 bcm.
“The production permits allow us to pro-
duce more gas from these two important fields
this [autumn] and through the winter,” Equinor
explained. “We believe that this is very timely,
as Europe is facing an unusually tight mar-
ket for natural gas. We are working on meas-
ures to increase exports from our fields on the

P8 www. NEWSBASE .com Week 38 23•September•2021