Norway Sees Stable Russia Gas Supply to EU Beyond Ukraine Crisis

Norway, Europe’s largest gas supplier after Russia, said it expects Russia to remain a stable exporter to the continent in coming decades as tensions over Ukraine escalate.

“We’ve seen that Russia -- even during the Cold War -- was a stable exporter of gas to Europe,” Norway’s Petroleum and Energy Minister Tord Lien said in an interview in Oslo yesterday. “We have no indication that won’t be the case in the coming years and decades.”

The European Union depends on Russia for 30 percent of its gas consumption. About half of that transits through Ukraine, which has become the center of the biggest crisis between Russia and the U.S. and its European allies since the Cold War.

Russia has been hit by sanctions after it annexed the Crimea peninsula from Ukraine following the overthrow of the government in Kiev. Russia, meanwhile, has threatened to cut off gas supplies to Ukraine over unpaid bills, though flows have remained uninterrupted this far.

“It’s a very serious situation,” Lien said. “It’s a situation we haven’t seen in Europe since 1945, with the annexation of another European state’s territory.”

The Group of Seven leaders said earlier this week Europe should find new energy sources to prevent Russia from using exports as a political weapon. Still, existing projects and anticipated future supply would only cut the region’s reliance on Russia to 25 percent by 2020, according to consultant firm Wood Mackenzie Ltd.

Snohvit Field

Norway exported 109 billion cubic meters of gas to Europe last year, including liquefied natural gas from the Arctic Snohvit field, making it the continent’s second supplier with a market share of about 20 percent. The Nordic country would only be able to increase exports by as much as 15 percent from a current level of about 300 million cubic meters a day, and only for a limited period of time, according to figures from the petroleum ministry.

“In the very short term, we’re able to increase capacity only a little bit,” Lien said. “That’s a marginal contribution.”

Norway will seek to continue developing its gas infrastructure and production and itself remain a stable supplier to the European Union, he said. Norway’s gas production is expected to remain at last year’s level through 2016 before rising to about 115 billion cubic meters in 2017 and 2018, according to the Norwegian Petroleum Directorate.

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