01-11-06

Faced with rising demand for energy and keen to reduce their dependency on Russian gas supplies, European countries are eyeing Norway's natural gas, available to the continent through a burgeoning web of pipelines.
In the past six years, Norway has practically doubled its annual gas exports to 90 bn cm (3,178.3 bn cf), making it the second biggest supplier to the European Union with a 16 % market share.

Earlier, the world's longest underwater gas pipeline was opened, linking Norway and Britain. The gas pumped through the Langeled pipeline will cover up to 20 % of Britain's needs in coming years. The Scandinavian country already supplies 30 % of France's needs and 25 % of Germany's.
"Due to the fact that consumption of gas is increasing in Europe... there is a clear increased interest for Norwegian supply of gas and therefore we're increasing our production and exports," Norwegian Oil and Energy Minister Odd Roger Enoksen told.

EU change of heart
From 50 bn cm in 2000, exports are expected to swell to 130 bn cm in 2010. The rise is warmly welcomed by European countries keen to ensure secure energy supplies and diversify their suppliers beyond Russia, which meets 25 % of Europe's gas needs.
A "gas war" between Moscow and Kiev in the dead of winter a year ago illustrated Europe's vulnerability: Russia turned off the taps to Ukraine after a dispute over prices, leading to knock-on disruption of supplies across Europe.

"Norway has been an important actor in the gas sector for a long time and will remain so. But it is Brussels' perception of Norway that has changed," said an analyst at Enskilda Securities, Arnstein Wigestrand.
The EU previously objected to Norway's practice of signing long-term supply agreements, urging suppliers and clients on the continent to review the terms of their contracts to ensure smoother gas supplies to the market, he recalled.
"But now the EU has changed its stance. In Brussels, they must be rubbing their hands in glee for each cm thatthe Norwegians are delivering," the analyst said.

No Russian-Norwegian competition
Russia recently signed a memorandum of understanding on gas cooperation with Algeria, the EU's third biggest supplier with an 11 % market share, raising fears of a possible gas cartel. The possibility of an "OPEC for gas" appears very hypothetical, but Norway has already ruled out participating in such a group.
"For a large quantity of our production we have long-term contracts, and we are part of the European Economic Area agreement and we have liberalized and opened up our gas supply completely, so we have no intention of going in that direction," Enoksen said.

He insists that Norway and Russia are not in competition to supply gas to Europe.
"We are dependent on each other to be able to supply the European market as well as possible," he added. "Russia will be as well a secure and very big supplier of gas in the future... Otherwise, if you don't do what's needed to have a secure supply of gas, the consuming countries can change from gas to other energy sources," he said.

With the Langeled pipeline just freshly in place, Norway is already looking to build a new gas pipeline to Europe to add to the 7,800 km (4,850 miles) already laid down or under construction.
The new pipeline would feed gas to Belgium, the Netherlands or once again Britain.