Norway reluctant to cap gas prices

Norway reluctant to cap gas prices

Difficult to cap the price of gas without the agreement of the first supplier of Europe… The Norway on Monday showered the hopes of a majority of European countries who want a cap on the price of gas imports to reduce their energy bills. After a telephone interview – the second in a few days – with the President of the European Commission Ursula von der Leyenthe Norwegian Prime Minister, Jonas Gahr Storesaid he was “skeptical” of this idea.

“We agree to have an even closer dialogue with the EU in the future regarding the various proposals that are on the table,” he said in a statement. “We approach discussions with an open mind but we are skeptical of a maximum price for gas,” he added.

Norway benefits from the price explosion

In the midst of emergency measures mentioned on Friday by European energy ministers to stem the rise in gas bills and electricity, some have spoken of a cap on the price of gas imports into the EU. While the European Commission has proposed capping the price of gas from Russiaseveral states such as italy point out that this only represents 9% of European imports and recommend a complete cap on the price of gas purchased by the EU.

Itself unfavorable to this idea, which could push liquefied natural gas (LNG) suppliers to look elsewhere, the Commission must submit its draft legislative text this week containing all the emergency energy measures. Norway, which largely benefited from the surge in prices exacerbated by the invasion of Ukraine by Russia, has so far been quiet on the issue of a cap.

“Too little gas in Europe”

Emphasizing the importance of price as a mechanism for adjusting supply and demand, Oslo returns the ball to the oil groups and recalls that European customers have themselves insisted in the past on spot contracts (at variable prices) rather than long-term contracts giving more visibility.

“A maximum price will not change the fundamental problem, namely that there is too little gas in Europe,” said Jonas Gahr Støre on Monday. As a consequence of the war in Ukraine, the Scandinavian country has recently supplanted the Russia the rank of leading gas supplier to Europe thanks to an 8% increase in its own deliveries and, above all, the fall in Russian deliveries.

Monster income

Soaring prices and rising production are helping to fill the coffers of the Norwegian state. Its oil and gas revenues could reach 1,500 billion crowns (150 billion euros) in 2022 – and 1,900 billion next year -, shattering the record set last year (830 billion), according to calculations by Nordea bank. Markets.

“The most important contribution that Norway can make in the current situation is to maintain high gas production in the future,” insists the Norwegian Minister of Petroleum and Energy, Terje Aasland. Norwegian exports could reach a record level of 122 billion m3, he said in early May. But criticism is emerging at home and abroad, with some fearing that the country is seen as a “war profiteer”.

“Embarrassing” sums

“As the war and the ensuing power crisis drag on, the sums flowing north are proving embarrassing,” judged the British weekly last week. The Economist.

The Norwegian embassies in several European countries are today worried about the repercussions that this situation could have on the image of the Nordic kingdom, assured the Norwegian newspaper on Monday. Dagens Naeringsliv. According to Jonas Gahr Støre, the question of a price cap had not been discussed during his previous meeting with Ursula von der Leyen last Wednesday.

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