Norway is the second larges oil producer in the world, second only the Saudi-Arabia. With formidable oil as well as gas reserves, it is in position to adapt or not decisions made by OPEC.
In light of it’s unique position among oil producing countries, we bring this paper on Norway. It should be mentioned that Norwegian natural gas exports to Europe are expected to rise quickly in coming years.
Note: Information contained in this report is the best available as of May 2000 and is subject to change.
Norway holds 41.4 trillion cubic feet (Tcf) of natural gas reserves. Norway is not a major natural gas consumer, although its consumption is expected to increase in coming years as natural gas-fired power plants come online.
Gas accounts for about 60 percent of Norway's overall offshore energy reserves and is expected to account for an increasing portion of Norway's energy exports.
Natural Gas Exports:
Gas export contracts are organized by Norway's Gas Negotiating Committee, which includes Statoil and Norsk Hydro. The Gas Supply Committee advises Norwegian authorities on which fields should supply gas to fulfill sales contracts.
Representatives from the 12 Norwegian and foreign companies active off Norway sit on the Gas Supply Committee. Norwegian gas is sold almost exclusively under long-term contracts.
Troll gas sales agreements (TGSAs), first signed in the late 1980s, led to a doubling in Norwegian gas exports. The first TGSA marked a new form of sales contract. These supply deals are based on specifying volumes of gas but not the fields that will deliver them.
Troll gas is the most important guarantor of these agreements. The other fields so far allocated to supply volumes under TGSAs are Sleipner East, Sleipner West, Åsgard and Oseberg. Contractual gas deliveries from Troll began in October 1996, from which point Norway was established as one of the most important gas suppliers to continental Europe.
Statoil expects Norway's share of gas deliveries to continental Europe to rise from 14 percent in 1996 to 20 percent by 2005. The following companies currently buy Norwegian gas: Ruhrgas, BEB, Meeg, Thyssengas and Verbundnetz Gas (Germany), Gaz de France (France), Gasunie, SEP (the Netherlands), Distrigaz (Belgium), Enagas (Spain), Austria Ferngas, OMV (Austria), Snam (Italy), and Transgas (Czech Republic). Germany is the largest natural gas market in Europe, and about 20 percent of the gas that Germany currently consumes comes from Norway.
In October 1998, France for the first time became connected via pipeline to a North Sea production field, when the NorFra pipeline linked Norway's Troll gas field to the French natural gas grid.
The pipeline is 521 miles long, the longest undersea gas pipeline in the world. About half of the gas from the pipeline will transit through France to points in Italy and Spain, while the other half will be consumed in France.
By 2005, the Norwegian pipeline is expected to supply one-third of France's total gas consumption. Norway signed an agreement with Poland in May 1999, whereby Poland will import annually from Norway 500 million cubic meters (17,650 million cubic feet) of gas from 2001 to 2006.
Existing Polish infrastructure cannot support significant imports from non-Russian sources, so pipeline development is under consideration. Norway currently plans to pipe the gas through Germany, under an agreement between Germany's Ruhrgas and Poland's state-held gas monopoly.
Natural Gas Production:
The Troll field contains over half of Norwegian gas reserves. It has a production capacity of 100 million cubic meters (3.5 billion cubic feet, Bcf) per day, and production in 1998 was 20 billion cubic meters (706 Bcf).
The Troll Gas development comprises the Troll A platform, the gas treatment plant at Kollsnes near Bergen, and pipelines linking these two installations.
Troll A is the tallest structure ever moved by humans. Its concrete gravity base structure has been built for a lifetime of 70 years. Block 31/2 was awarded to Shell in Norway's fourth offshore licensing round in 1978, and the terms of the agreement allowed Statoil to take over as operator in 1983. Blocks 31/3, 5 and 6 were awarded to Statoil, Norsk Hydro and Saga Petroleum in 1993. The division of roles on the field has been controversial.
Currently, Statoil (and the SDFI) has about three-quarters of the shares and is the operator, followed by Norsk Hydro, Shell, TotalFinaElf, and Conoco.
Troll is not the only active gas field in Norway's North Sea. Gas sales began in 1977 from Ekofisk and Frigg.
Ekofisk supplies Ruhrgas, Gaz de France, Gasunie and Distrigaz. Frigg production is sold to British Gas. Agreements on selling gas from Statfjord, Gullfaks and Heimdal were signed in 1981 and deliveries began in 1985 to Ruhrgas, BEB, Thyssengas, Gaz de France, Gasunie, Distrigaz, Elf and Meeg.
Remaining commitments under these deals average six billion cubic meters per year (212 Bcf).The Åsgard field on the Halten Bank in the Norwegian Sea is one of the most important projects under development.
The field is being developed in a chain of four interconnected projects: development of Åsgard itself, construction of the Åsgard Transport gas trunkline from the field to the Kårstø gas treatment plant north of Stavanger, the Kårstø development project, and the Europipe II gas trunkline from Kårstø to Dornum in northern Germany.
Oil production began in May 1999, and plans call for gas production to begin in the second half of 2000. Statoil is the operator of the project, which is one of Norway's giant offshore developments, on par with Ekofisk and Troll.
Subsea production installations in the field are planned to be the most extensive in world, embracing a total of 51 wells grouped in 17 seabed templates. It will link the Halten Bank area to Norway's gas transport system in the North Sea.
Statoil now is developing the Halten Bank South area of the Norwegian Sea, having taken over as operator in January 2000 (Saga had been the operator). Recoverable reserves of the Halten Bank South fields are estimated at 140 billion cubic meters (almost 5 Tcf) of gas and about 440 million barrels of oil and condensate - on par with Åsgard.
The huge Ormen Lange field, with an estimated minimum of 10 Tcf of natural gas, now has been licensed. The last remaining unlicensed portion was awarded out-of-round to Royal Dutch/Shell in the fall of 1999.
Shell will be the operator with a 16 percent stake, and partners include Norsk Hydro (15 percent), BP Amoco (10 percent), Statoil (9 percent), and ExxonMobil (6 percent). Ormen Lange could turn out to be the second largest Norwegian gas field, behind Troll.
In 1998, 99 percent of Norway's electricity generation came from its 27 million kilowatts of installed hydroelectric capacity. State-owned Statkraft is Norway's largest producer of hydroelectric power, with 91 hydroplants comprising 30 percent of Norway's installed capacity.
Norway's hydropower capacity is believed to be fully exploited. Norway has strict environmental regulations that have prohibited the construction of fossil fuel-based electricity plants, and the country's cold climate results in a high electricity demand.
The new Stoltenberg government would support plans to build natural gas-fired plants to fuel the country's increasing electricity demand, replacing electricity imports from more carbon-intensive coal-fired plants. Gas-fired plant construction is not expected to begin immediately, however, as electricity prices in the region are generally considered to be too low to attract major new investments.
Norway is a proponent of "green power" from renewable sources and has made efforts to make its oil sector as environmentally friendly as possible. Under its Kyoto Protocol commitment, Norway has agreed to limit its carbon emissions to a 1 percent increase from 1990 levels by the 2008-2012 commitment period.
In a dual effort to meet its Kyoto target and to further develop technologies to make oil and gas production less environmentally damaging, Norway has been a leader in alternatives for reducing carbon emissions.
As a result of high activity in the oil and gas extraction sectors, Norway is relatively more energy-intensive than most OECD countries, and possesses one of the highest per capita energy consumption levels in the world. Air pollution in Oslo is not as severe as in other major world cities.
Minister of Petroleum and Energy: Olav Akselsen (since March 2000)
Proven Oil Reserves (1/1/00): 10.8 billion barrels
Oil Production (1999E): 3.1 million barrels per day (bbl/d), of which 3.0 million bbl/d was crude oil
Oil Consumption (1999E): 0.2 million bbl/d
Net Oil Exports (1999E): 2.9 million bbl/d
Crude Oil Refining Capacity (1/1/00): 358,000 bbl/d
Natural Gas Reserves (1/1/00): 41.4 trillion cubic feet (Tcf)
Natural Gas Production (1998E): 1.63 Tcf
Natural Gas Consumption (1998E): 0.13 Tcf
Net Natural Gas Exports (1998E): 1.50 Tcf
Electrical Generation Capacity (1/1/98): 27.4 gigawatts
Electricity Generation (1998E): 115 billion kilowatthours (bkwh)
Electricity Consumption (1998E): 111 bkwh
Recoverable Coal Reserves (12/31/96): 7 million short tons (Mmst)
Coal Production (1998E): 0.4 Mmst
Coal Consumption (1998E): 1.8 Mmst
Major Systems: Statfjord, Oseberg, Gullfaks, Ekofisk
Major Companies: BP Amoco, Conoco, ExxonMobil, TotalFinaElf, Norsk Hydro, Phillips, Shell, Statoil, Chevron
Source: United States Energy Information Administration.
© 2000 Mena Report (www.menareport.com)