Norway may not match last year's record natural gas exports of 115 Bcm in 2016, the country's energy minister said Thursday, but Oslo is confident of its projections of average annual exports of 100 Bcm over the next 20 years.
In a wide-ranging interview with S&P Global Platts in London, Tord Lien said Norwegian gas exports would remain high in the future through careful exploitation of the vast resources on the Norwegian Continental Shelf.
"I'm not sure if this year we'll be able to beat last year, but it'll be in that range," Lien said, when asked if supplies would be higher than 2015's record 115 Bcm.
"You can't have records every year," he said.
Given the system's downtime each year for planned maintenance, there would always be a variable impact on overall annual flows, he added.
But, Lien said, given the current technical capacity of the Norwegian gas system of some 130 Bcm/year, "when you are exporting 115 Bcm, that means everything is running smoothly."
Some analysts have questioned Norway's ability to maintain its gas exports at such high levels, especially given the slowdown in investment in new exploration since the oil price crash of 2014-2015.
In addition, no new major gas discoveries have been made for many years on the NCS.
Lien, though, said he was not concerned.
"We have a very good understanding on the next 20 years where we expect to export on average 100 Bcm/year," he said. "That is less than today, but it's still
high. It's going to still be more than 20% of the EU's gas consumption."
EU SIGNAL
Key to future developments on the NCS is the knowledge that there will be a market in Europe for Norwegian gas, Lien said.
Oslo, he said, was buoyed by the strategy announcement in February by the European Commission that Europe would rely heavily on gas for the coming two decades and beyond in its energy supply mix.
"That was a strong signal from the Commission, and I will like it even more when it really materializes," Lien said, pointing to the UK's move to phase out coal in power generation over the next decade as an example of concrete action.
"That is really the kind of signal we need, and if Germany were to proceed with their idea of doing the same, that would be of great importance for future investment decisions, which -- let's face it -- are necessary to be able to export 100 Bcm/year," he said.
Lien said the 100 Bcm forecast was based on both already discovered resources and those that are yet to be found, including in the relatively remote Norwegian high north and Barents Sea.
Asked whether he was confident of a major gas find in these new frontier areas, Lien was cautious.
"If you had asked me that question two years ago, I would've said yes," he said.
"Some of the companies tend to think there is oil there, not gas, so it looks less likely now than two years ago. But we have to do the drilling," he said, adding that both state-controlled Statoil and Lundin Petroleum planned exploration wells in the spring of 2017.
Lien was also confident on Norway's ability to build new pipeline infrastructure in the remote Arctic waters if a big gas find was made, linking in with existing infrastructure, provided it was economically sound and sustainable.
"We have already built a gas pipeline into the Arctic with the Aasta Hansteen field [the Polarled line]," he said, adding that an alternative would always be a new LNG plant or an expansion of the existing Snohvit LNG facility.
TROLL PHASE 3, 'VALUE OVER VOLUME'
Lien also said that the third development phase of the giant Statoil-operated Troll field would inevitably go ahead as Norway looked to maintain its gas export levels.
The development would see gas recovered from the Troll Vest structure, which mostly contains oil.
"It will happen in time, but there is no urgency to do it this year or next year," Lien said. "But it is one of the huge investments that will come on the NCS in the years ahead, obviously. You have to have a plan -- otherwise you lose income either from oil or from gas. So it has to be planned carefully.
"But that has been the story of the Troll field development," he said. "There has been a huge political debate on this issue, and what we have done so far has worked out very nicely for the Norwegian economy in terms of value creation from in-place resources."
Asked whether the government backed Statoil's current "value over volume" strategy, whereby some gas production is held back during periods of low prices, Lien said it was up to companies how they manage their resources.
And that includes majority state-owned Statoil.
"This has to be one of the real beauties of how we have organized government ownership in Norway -- the fact that there is arms-length distance when it comes to these kinds of decisions," he said.
Nonetheless, the government is keen to make sure that all operators on the NCS, including Statoil, push forward when it comes to time-critical development projects.
"You can't have any nonsense from the companies," he said. "There are some obligations that come with being a player of the NCS, and one of them is that you will make decisions that don't waste resources. When it comes to those decisions, Statoil is under the same pressure and expectation from the Norwegian government as everybody else is."
For new field developments, some delay was not a bad thing, Lien added.
"It's a good strategy to work hard on getting costs down, and if that means postponing the investment decision by one year, that's a good strategy," he said.
