Norway expects its gas export prices to drop next year from the 2017 and 2018 levels as Europe will buy more liquefied natural gas (LNG) from other sources, the Norwegian government said in its revised 2018 budget on Tuesday.
Norway—which exports almost all the gas it produces—is the third largest exporter of natural gas in the world and supplies around 25 percent of the gas demand in the European Union (EU).
Gas export prices will go up slightly this year compared to 2017, but will drop in 2019, because of increased buying of LNG cargoes in Europe, Norway’s government said today. The long-term gas export price is expected to stabilize at a higher level than the projected price for 2019.
The slight rise in Norway’s 2018 gas export prices will be due to high coal prices, reduced gas storage capacity in Europe, and low access to hydro and nuclear power, according to the Norwegian government.
Norway is competing with Russia for Europe’s no.1 gas supplier, with Russia ahead with around one-third of European gas supplies.
About 95 percent of Norwegian gas is transported via a network of subsea pipelines to other European countries, while about 5 percent is exported as LNG by ship from the Melkøya facility in Finnmark. Most Norwegian gas sold on the European market is delivered to Germany, the UK, Belgium, and France, where Norwegian gas accounts for between 20 percent and 40 percent of total gas consumption.
Nearly all oil and gas produced on the Norwegian Continental Shelf is exported, and combined, oil and gas exports account for around half of the total value of Norwegian exports of goods. This makes oil and gas the most important export commodities in the Norwegian economy.
Norway’s gas production rose last year for a fourth year in a row, and gas sales hit a record high, according to Norwegian Petroleum. Production is expected to remain high over the next few years.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.