Oslo — 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 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, 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 – Reuters
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