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Norway refuses to cut gas prices for Europe

The Norwegian Ministry of Petroleum will not force energy companies to sell gas to Europe at a discount, as this is against market rules.

“I do not pursue a policy of requiring Norwegian energy companies to sign contracts to sell gas to Europe at a fixed price,” Norwegian Petroleum Minister Terje Asland wrote in a letter to parliament on August 25. .

The statement was made by Minister Asland after an MP suggested that Norway should show solidarity and share difficulties with the European Union (EU) by asking its companies to sell gas at a low price. fixed below the current market price.

According to Asland, market activities need to follow the law of supply and demand. “When goods are scarce, prices will be high. That will help increase production and redirect gas to the markets that need it most,” he said.

He added that rather than reducing prices, Norway should focus on supplying as much gas as possible to Europe, to meet the rising demand and maintain its position as a reliable gas supplier.

The Draupner gas rig in the North Norwegian Sea.  Photo: Equinor.
The Draupner gas rig in the North Norwegian Sea. Image: Equinor.

He said suppliers in Norway have long been ready to sign long-term contracts if commercial terms are agreed upon by both sides. The minister pointed out that the EU abandoned long-term contracts in favor of the spot market 20 years ago and that the Norwegian system still “given the choice to companies entering into such contracts, only based on economic interests”.

Norway has overtaken Russia to become the largest gas supplier to the EU, after Moscow cut supply through the Nord Stream 1 pipeline by 80%. Russia will continue to significantly reduce gas supplies to Europe in September for the reason of pipeline equipment maintenance.

Earlier this month, Minister Aaland also said Olso was considering reducing the amount of electricity sold to Europe if water levels in hydroelectric reservoirs were low. 90% of Norway’s electricity comes from hydroelectricity. As one of Europe’s largest electricity exporters, Norway sells about one-fifth of its total electricity production to its neighbours.

Some Norwegian politicians have even proposed stopping electricity exports until the risk of an energy crisis is gone.

Oslo’s move raised fears of a difficult winter for Europe, particularly Britain, Germany and the Netherlands, three countries heavily dependent on cheap Norwegian energy.

Duc Trung (Theo Reuters)


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