Norway’s state-controlled Equinor is paying close attention to signs of industrial gas demand recovery in Europe as part of its monitoring of the global gas market, CEO Anders Opedal said Feb. 7.
Speaking to reporters following the release of the company’s fourth-quarter results, Opedal also pointed to demand increases in Asia.
“We see some interesting signs in terms of demand recovery,” Opedal said, noting rising gas consumption in China as well as a 10% increase in industrial demand in Europe, particularly in France and Germany. “We pay attention to the demand recovery in Europe and increased demand in Asia.”
Opedal also said the weather remained a key factor determining gas market dynamics.
“When we are watching the gas market going forward, we are looking at the weather — based on both the temperature for gas demand but also the production of renewables,” he said.
He added that gas storages were at “OK levels” currently following a mild winter.
European gas storage sites were filled to 68.6% of capacity as of Feb. 5, according to the latest data compiled by Gas Infrastructure Europe.
SEFE deal
Equinor is the biggest gas producer in Norway, which in turn is now the biggest single supply source to Europe after Russian pipeline exports were sharply curtailed through 2022.
Opedal said the energy produced by Equinor was needed, pointing to its recent long-term gas supply deal with Germany’s SEFE.
“The SEFE contract [is] the largest gas contract we have entered into since the 1980s,” he said.
Equinor announced the deal on Dec. 19, saying it had agreed to supply SEFE with 111 TWh/year (10 Bcm/year) of gas over 2024-2034.
The two sides also agreed an option to extend the supply deal for a further five years, with total volumes across the period of 319 TWh — or around 6 Bcm/year.
The huge supply deal reflects a growing trend in Europe for securing new long-term gas purchase deals on the back of increased concerns over energy security.
Q4 price
At the same time, European gas prices have come down from their record highs of summer 2022, with Equinor posting a sharp fall in its realized European gas price in Q4 2023.
In its earnings report, Equinor said its realized piped gas price to Europe averaged $13.07/MMBtu in Q4 2023 compared with $29.84/MMBtu in Q4 2022.
“The realized European piped gas price decreased, attributed to lower demand, increased LNG imports and high storage levels,” it said.
For the full year 2023, the average realized price was $13.86/MMBtu compared with $32.84/MMBtu in 2022.
Spot prices have fallen further into 2024. Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price on Feb. 6 at the equivalent of $9.01/MMBtu.
Equinor also said its gas sales in Q4 increased slightly year on year, primarily because of higher piped gas sales from the Norwegian Continental Shelf.
It added that its gas and power unit contributed “substantially” to adjusted earnings, “capturing value from geographical optimization of piped gas in Europe, gas price volatility and LNG sales.”
Source: Hellenic Shipping News
