LNG

Norway and the UK, among the two main oil and natural gas producers in Europe and who are outside of the European Union since the UK’s Brexit vote, have opened a new chapter in energy cooperation as they continue to influence European gas and LNG markets.

Norway, the LNG producer whose export plant at Hammerfest is still offline after last year’s fire, has offered four production licences in the Government’s 25th licensing round split between seven energy companies and with one block located in the Norwegian Sea and three in the Barents Sea.

The 25th licensing round is facilitating exploration and production activity on the Norwegian Continental Shelf.

“This is important for employment and value creation in the Norwegian oil and gas industry,” said Minister of Petroleum and Energy Tina Bru.

“The (licence) allocations are in line with the goals we presented in the White Paper Energy for Work. They are also an important part of the framework conditions for the companies on the NCS,” added Minister Bru.

The 25th licensing round had been announced on November 19, 2020 and the application deadline was February 23, 2021.

Companies could apply for licences in nine different areas, eight in the Barents Sea and one in the Norwegian Sea.

The successful companies have committed to acquiring 3D seismic surveys and to initiate some wildcat drilling.

Two licences were awarded to Norwegian state-backed company Equinor, operator of Hammerfest LNG, now shut until March 2022 after the fire on September 28 in 2020.

The first Equinor licence (50 percent stake and operator) is in partnership with state company Petoro AS (20 percent), Sweden-based company Lundin Energy (20 percent) and Idemitsu Petroleum, part of the Idemitsu Group of Japan (10 percent).

The sole Norwegian Sea licence went to the UK’s Ineos (60 percent) and in partnership with Royal Dutch Shell.

Their 1055-B block is located between two previous large natural gas finds.

The two other Barents Sea licences were awarded to Equinor with Lundin Energy and Petero, and one went to Austria’s OMV (30 percent) with Vår Energi (70 percent and operator), a joint venture between Italy’s Eni and the private equity investor HitecVision.

Norway, the main West European supplier of long-term pipeline natural gas directly to Germany, France Belgium and the UK, said seven companies had applied for production licences in the 25th licensing round on the Norwegian shelf with any gas finds providing more competition to LNG cargoes from outside the region.

“The numbered rounds are focused on key parts in our least explored, open areas,” said Tina Bru, the Norwegian Minister of Petroleum and Energy.

“They are an important supplement to the APA (awards in pre-defined areas) rounds as exploration activity in immature areas gives the state as a resource owner more knowledge about the resource potential,” explained Bru.

“It enables us to identify resources and create value for the community. We will now start processing the applications from the seven companies,” she stated.

Norway, while being the main pipeline natural gas supplier to Europe, along with Russia’s Gazprom, is in competition to LNG deliveries from nations such as Qatar, the US, Nigeria, Algeria and Trinidad and Tobago, as well as Russia.

The Norwegians are also the only large-scale producers of LNG in Western Europe from the Hammerfest LNG plant, which has been closed until the third quarter of 2021 because of ongoing repairs from a fire in September 2020.

Damage caused by the fire at the LNG facility will take until around October 2021 to repair.

The fire, in which no one was killed nor injured, suffered its main damage from large amounts of seawater from the extinguishing process downing auxiliary systems such as electrical equipment and cables.

Feed-gas for the single-Train Hammerfest liquefaction facility, which exports around 5 million tonnes per annum of LNG, comes from the Snohvit gas field in the Barents Sea.

The 25th licensing round comprises nine areas outside the APA area on the Norwegian shelf.

The round was announced on the 19th of November 2020 and includes one area in the Norwegian Sea and eight in the Barents Sea.

The companies that have applied for production licences are: Norske Shell; Equinor Energy; Idemitsu Petroleum Norge; Ineos E&P Norge ; Lundin Norway AS; OMV (Norge) and Var Energi AS.

Norway also allocates exploration areas on the Norwegian Continental Shelf and these take place annually through two equal licensing rounds.

These rounds include areas in the most famous exploration areas. As exploration activity has been going on for several decades, the most well-known exploration areas now include most of the North Sea and the Norwegian Sea and a large part of the Barents Sea to the south.

The Ministry in January 2021 awarded 61 upstream licences in pre-defined areas of the NCS to 30 licensees, including prominent LNG players such as BP, Shell, Total and Eni of Italy, as well as ConocoPhillips, the only bidder among US majors.

Norway, Western Europe’s biggest supplier of pipeline natural gas in competition to LNG, approved the go-ahead for the Northern Lights project, enabling the capture and sequestration of carbon-dioxide 2,600 metres below the seabed in geological strata to hand-off criticism of the fossil fuel industry.

Norway, Western Europe’s largest oil and gas producer and the third-largest exporter of natural gas in the world after Russia and Qatar, has announced its 25th licensing round on the Norwegian Continental Shelf for February 2021.