LNG

Equinor, the Norwegian energy major, LNG plant owner and pipeline natural gas supplier to Europe, is increasing gas output on the Norwegian Continental Shelf with a gas field joint venture.

Italian energy company Eni has explained the strategy behind its agreed acquisition for $4.9 billion of UK-based Neptune Energy, which is controlled by equity funds and owns key global LNG stakes and gas field assets in Algeria, Indonesia, Norway, the UK, the Netherlands and Australia.

July 26 (LNGJ) - Vår Energi ASA, a player in the Norwegian oil and natural gas sector and majority-owned by Italian major Eni, reported cash flow from operations in the second quarter of $1.53 billion versus $1.31Bln in the prior-year quarter. The company operates four fields on the Norwegian Continental Shelf, located in the Barents Sea, the Norwegian Sea and the North Sea. In addition to the operated fields, Vår Energi currently holds ownership interests in 32 partner-operated fields.

   “The continued strong cash flow generation reflects another quarter of safe and efficient operations with high commodity prices and stable production and supply of gas to our customers in Europe,” said Chief Executive of Vår Energi Torger Rød. “This supports our commitment to deliver on our strategy and a $1Bln minimum dividend expectation for 2022,” added the CEO. “Second-quarter production was impacted by seasonally high maintenance and turnaround activity across our own and partner-operated licences,” he added.

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.