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The Norwegian energy ministry has announced that it will follow through with previous plans and lower the tariffs it charges for using its natural gas pipeline system. This decision has angered several investors in the pipeline, one of whom is Abu Dhabi, who have begun the process to sue Norway for compensation.
The group of investors, which includes several international investment funds, such as; the Abu Dhabi Investment Authority, the Canadian Pension Fund, and Allianz, have spent around $5.1 billion in the past few years to buy their stakes in the Norwegian pipeline, which were always considered a safe investment.
Initial plans did have the government introducing the tariff cut at the end of the year, but that has been pushed back to 2016 now. The 90% tariff reduction is intended to encourage operators in mature fields to increase production and more exploration in the Arctic.
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Norway’s Gassled pipeline network consists of 8,000 kilometres of pipe, and transports gas toterminals in Great Britain, France, Belgium, and Germany. (Statoil)
Investors will see their returns fall from a predicted seven percent to four percent, and have declared that the decision is illegal and therefore invalid, although obviously the Norwegian government claims it has acted within the law.
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Abu Dhabi Investment Authority invested in Solveig Gas Norway, one of the main shareholders in the Gassled system (Norway’s network of natural gas pieplines), along with Njord Gas Infrastructure, and Silex Gas, controlling 39%; Petoro, the Norwegian state-owned energy company is the majority shareholder with 45.8%
A spokesman from the energy ministry admitted that they had received letters from three companies and “are taking them into the consideration.”
Trygve Pedersen, the head of Solveig Gas Norway, said that the letters are a way of “basically notifying that their (ministry's) decision lacks legal foundation, and that we will claim financial losses.”
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com