Norway's Aker BP wants "price floor" in European gas supply deals
11/11/2022 16:18
By Nerijus Adomaitis
OSLO, Nov 11 (Reuters) - European buyers of Norwegian
natural gas should commit to paying a minimum price if they want
to obtain long-term supply deals that prevent price spikes like
those seen this year, the chair of Norwegian producer Aker BP
AKRBP.OL told Reuters.
Gas prices in Europe have soared to record highs and are
currently up fivefold from levels seen in the first half of 2021
as Russia squeezes supplies following its invasion of Ukraine.
Norway is now the biggest exporter of natural gas to the
European Union, accounting for around a quarter of imports, and
remains the largest supplier to Britain, boosting the earnings
of Norwegian energy companies as well as state coffers.
The EU and Norway have agreed to form a working group to
discuss ways to stabilise gas prices, but sales are ultimately a
transaction between companies, not governments.
Belgium, Greece, Italy and Poland on Friday threatened to
block a new set of European Union steps to alleviate the energy
crisis because they are angry that a gas price cap is not among
detailed proposals, diplomats said.
Aker BP would like to see a "price floor" as a condition of
entering into long-term deals that also limit the upside, but
has failed so far to find takers for such deals, the board chair
of Norway's second-largest oil and gas producer said.
"The buyers want a price ceiling, but not a floor. Selling
the upside without any downside protection is not an attractive
instrument," Oeyvind Eriksen said.
"As producers, we are interested in as long contracts as
possible, as long as we get a fair value with a robust return
over time," he added.
Eriksen has said previously that a price cap would likely
lead to reduced supply and higher demand, effectively worsening
the crisis.
Making long-term commercial deals possible would require EU
governments to provide support, Eriksen said, as no private
counterparty is currently willing to commit to long-term prices
for gas.
Norway's Equinor EQNR.OL , which sells about 70% of
Norway's gas output, has said European buyers should be prepared
to pay high prices for years to come amid supply shortages.
(Reporting by Nerijus Adomaitis, editing by Terje Solsvik,
Kirsten Donovan)
((nerijus.adomaitis@thomsonreuters.com; +47 9027 6699; Reuters
Messaging: nerijus.adomaitis.thomsonreuters@reuters.net))