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Brussels (UPI) Mar 8, 2013
Natural gas produced in Norway has a role to play in the European Union's low-carbon energy future, EU Commissioner Gunther Oettinger assured this week.
Amid warnings from Norwegian energy major Statoil that the European Union's low-carbon 2050 Energy Roadmap has created political uncertainty for further investments in natural gas infrastructure, Oettinger sought to reassure attendees at Tuesday's EU-Norway Gas Conference in Brussels that support for natural gas remains on the table.
"I strongly believe that whatever we do, fossil fuels will be part of the energy mix for a long time to come," he said.
The biggest customers for Statoil's natural gas are gas-fired electric power plants but competition from cheaper coal and state-subsidized renewable energy is prompting energy providers to rethink plans for more such facilities.
The situation moved Statoil Senior Vice President Rune Bjornson to tell the Financial Times this week that a lack of clarity in EU policies toward natural gas isn't helping.
"Continued political uncertainty around gas demand in Europe will ultimately have an effect on the willingness of producers, including ourselves, to invest in new gas supplies," he said.
Norwegian Energy Minister Ola Borten Moe told the Brussels conference his country will continue to be a "long-term, stable and reliable supplier of natural gas to Europe," the Norwegian news agency NTB reported.
"But," he added, "it is important for Norway and especially for the players who will develop and invest heavily in Norwegian gas production to have security attached to the market and that it fits with in political awareness, social consciousness and various policy documents."
Oettinger said Tuesday that natural gas is seen as "a willing partner" to the changes being sought under all the scenarios being considered for the 2050 road map.
"In various contacts with senior industry representatives, it is clear to me that natural gas will actively contribute to the development of the wider economy," especially the revitalization of Europe's industrial base -- if its prices remain competitive.
He cited Statoil's new pricing model as an example of what will be needed to complete in the European Union's single, open market for energy, saying, "Statoil is at the forefront of the pricing revolution which is leading (its) market share in Europe to grow."
Unlike Russia's Gazprom, which indexes gas prices to consistently high oil prices, Statoil has linked its gas prices to the spot market and sells more than half of its natural gas exports under such contracts.
That has led to the Norwegian company grabbing European market share from Gazprom and posting record sales in the continent.
Even so, European power companies are hedging their bets on gas-fired power plants as their profitability is coming under pressure.
German utility E.ON indicted last month it is considering partial closure of one of Europe's most modern gas-fired power stations in Irsching, Bavaria, the British trade publication Gas to Power Journal reported.
E.ON Chief Executive Officer Johannes Teyssen said the move has being made because "the rapid growth of renewables has made gas-fired plants largely uneconomic to operate.
"Even our newest gas turbines at Irsching power station face economic problems," he said. "Going forward, they'll likely operate far fewer than 2,000 hours per year and won't generate enough revenue to cover their costs. Under those circumstances, we could no longer justify their continued operation."
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