Equinor has its hand in all the pies as it boosts gas exports ahead of the European gas crisis, while its investments in oil and oil product exports are stronger than ever, not forgetting the company’s ever-expanding renewables portfolio. Equinor is the example of an oil major that’s doing it right.
This week, Equinor announced it would be boosting its gas exports, as much of Europe continues to contend with severe gas shortages. The decision was made after the company was given permission by the Ministry of Petroleum and Energy to increase production from its Oseberg and Troll fields on the Norwegian continental shelf. Production in both fields will increase by one billion cubic metres for the gas year starting 1 October.
The increase is aimed at providing European states facing shortages with greater gas imports during the high-demand winter months. This comes after wholesale gas prices in the U.K. increased by 70 percent in August and are expected to continue to increase so long as there are shortages in supply. This month, gas prices across Europe reached levels not seen since 2014, highlighting the severity of the situation.
The need to boost gas production was music to Equinor’s ears as, after 25 years of production in its Troll field, around 50 percent of the gas still remains in the ground, with around 715 billion standard cubic metres of recoverable gas remaining. Equinor’s recent completion of its Troll Phase 3 project has prepared the company for this increase in production. It also ensures that its gas production is more carbon-friendly, with reduced carbon emissions.
But gas is not the only fuel Equinor is supplying to meet increased demand. As the Asian market for oil and gas continues to increase, Equinor has been there to meet demand, having more than doubled its crude exports to the region since 2017.
Equinor was able to increase its exports to Asia by 30 percent last year, delivering 210 million barrels of crude oil from its fields in the U.S., U.K., Brazil, West Africa, and Russia, despite oil demand around the globe plummeting due to Covid-19 restrictions and uncertainty.
Asia is expected to contribute around 90 percent of the world’s growing oil demand over the next five years, meaning that oil producers from around the world are fighting for the giant oil guzzling region’s business. India and China in particular, with their ever-growing populations and huge industry, are two of the biggest drivers for oil demand in the region.
With crude from its Johan Sverdrup oilfield, Equinor offers the region the perfect solution to its demand criteria. Equinor plans to continue its upstream production of one of the world’s lowest-carbon crudes, supporting Asian states in their need to meet demand while also responding to international pressure to decarbonize.
At present, private sector refiners in China are the biggest Asian consumer of Johan Sverdrup crude, with 14 million MT received in the Shandong province since the first delivery in January 2020, but Equinor’s popularity across the whole region is steadily growing. Equinor estimates that world oil demand will reach 20 times the company’s current output, making the low-carbon crude an essential commodity for those trying to meet net-zero carbon goals over the coming decades.
As Equinor’s oil and gas business goes from strength to strength, despite pressure to move away from fossil fuels and a dip in demand across some areas of the world, it has not stopped the company from investing heavily in its renewables sector.
This month, the Norwegian government injected $10 million through its Green Platform scheme into the Equinor-led Ocean Grid offshore wind program. The aim is to work with Norwegian energy institutions and private firms to develop and run a wind-powered offshore grid over a period of three years.
Florian Schuchert, vice president of offshore wind solutions at Equinor, explains, “Our objective is to realize offshore wind on a large scale [off Norway].” “We have to build wind farms in a cost-effective way, and we of course need to get the power all the way to the customers. It's crucial to our success that the energy companies, research institutions, and suppliers collaborate towards this goal,” he stated.
Equinor has already begun to develop its Hywind Tampen 11-turbine floating offshore wind farm in the North Sea, which will commence operations in late 2022. It is expected to be the world’s first floating wind farm to power offshore oil and gas assets, thereby decarbonizing operations. Equinor will, at that point, manage a third of the world’s floating offshore wind capacity, building upon its existing Hywind Scotland field.
Much of the company’s success comes from its willingness to work closely with other companies and experts in the development of a diverse portfolio of energy projects. For example, most recently Equinor announced it had signed an agreement to collaborate with Russian company Rosneft to develop low carbon solutions in their joint projects. This has helped Equinor ensure its longevity in a world that is increasingly pushing for a move away from fossil fuels or at the very least the production of much less carbon-intensive oil and gas.
As other companies, such as Total – now TotalEnergies, and Royal Dutch Shell, have been forced to change their approach to energy projects due to international pressure to meet green policies, Equinor has accelerated low-carbon oil and gas production internationally and is quickly becoming a world leader in wind energy production, demonstrating that it is indispensable in the future of international energy.
By Felicity Bradstock for Oilprice.com
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