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Norway promises Europe more gas as prices soar By Reuters


© Reuters. FILE PHOTO – Offshore oil and natural gas supply vessels (PSVs), are docked on a Stavanger, Norway pier, August 10, 2021. REUTERS/Nerijus Adomaitis

By Nerijus Adomaitis, Guy Faulconbridge and Susanna Twidale

OSLO/LONDON (Reuters) – Norway agreed on Monday to increase exports to the rest of Europe as record high wholesale natural gas prices prompted suppliers in Britain to seek state support and raised fears of a food supply crunch.

As economies recover from COVID-19 lockdowns, global demand for LNG in Asia has led to lower supplies of liquefied natural gases to Europe. Wholesale gas prices have also risen in recent months.

According to sources within the firms, the top energy companies in Britain asked for assistance from the government to pay the costs of taking on clients who have lost their customers due to high wholesale gas prices.

Equinor is Europe’s second largest gas supplier, after Russia’s Gazprom. (MCX): Sources in the companies said Monday that Norway allowed a 2 billion cubic meter (bcm), rise in Norway’s gas exports beginning Oct. 1. The Troll and Oseberg gas fields will be used.

According to Reuters, this increase is almost 2% of Norways annual exports of pipeline gas.

Kwasi Kwarteng, British Business Secretary, welcomed Norway’s move, as Norway supplies less than a third of Britain’s gas. However, he wanted to assure consumers there wouldn’t be a crisis.

Kwarteng stated that there is sufficient supply and sufficient demand and that we don’t expect any shortages.

He stated that the country would not return to 1970s Britain, where power cut and other problems made it the’sickman of Europe. In those days people were left without heat or electricity for three straight days.

He said, “This winter, there is absolutely no question,” that the lights will go out and people won’t be able to heat their homes.

European homeowners face rising winter heating bills because of confluences of global factors. These global factors have made it questionable how susceptible Europe is to changes in international energy prices.

Low storage stocks and high European Union carbon prices have all contributed to a rise in benchmark European gas prices. This has been accompanied by a higher demand from Asia, low gas supplies from Russia, reduced renewable output, and outages that caused nuclear maintenance problems.

The rising gas prices are causing a variety of problems in other markets. This includes a lack of carbon dioxide and fertilizer plant closures that have resulted in fewer supplies.

The head of the lobbying group for the sector warned that some British meat processors could run out of carbon dioxide – which is also used in the production of beer, cider, and soft drinks. This will force them to stop production within five days.

Yara, which is the biggest trader of ammonia in the world, has brought supplies to Europe via production plants in Australia, Trinidad and the United States to boost fertilizer capacity following a surge in wholesale gas prices.

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Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.