– It takes a lot – E24

– It takes a lot – E24

Holmenkoline (E24): The gas market is tense, but Equinor CEO Erin Rummelhof does not believe last year’s high prices will repeat themselves. – It was a very extreme year.

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– The market is still very tense, says Irene Rummelhoff from the stage at the Pareto Conference in Holmenkollen.

She is Equinor’s Executive Vice President of Marketing, Conversion and Processing. Among other things, she is responsible for the company’s gas sales.

This week gave an insight into the company’s vision for the gas market. Just a year ago there was a full-blown energy crisis, with gas prices at their worst by about ten times higherhigherThe peak level was around €340 per MWh for the European gas price (TTF). This price is currently around 38 euros per megawatt hour from now on.

At the peak, the price of electricity in southern Norway also reached more than six kroner per kilowatt hour as the average price for the day.

– Many people in Norway are concerned about rising electricity prices, and the price of gas can affect this. Is it unlikely that prices will rise to the maximum they reached last year?

– It will take a lot for it to return to what it was last year. It was a very harsh year, a very cold winter, says Rummelhoff.

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– It could be a small crisis

The Equinor director points out that the European gas market was under great pressure last fall, with small amounts of gas in stock. Now the warehouses are almost full, but the weather in Europe will be important.

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-Demand depends greatly on the weather. Every winter holds a reset button for the gas market, Rummelhof said from the podium at the Pareto Conference this week.

A large portion of Equinor’s gas goes to industry and home heating in Europe. Rommelhof says gas stocks in Europe are now 94 percent full, and he believes they will reach 100 percent before winter. The heating season begins in October.

-If the winter is cold, there may be a small crisis next year. But if the winter is normal or mild, we will probably get there “jamming through”“jamming through”By getting More or less like today, she says.

But the market is tense, so it doesn’t take much before you get these jumps in prices, Rummelhoff says.

Gas prices have been volatile in relation to Gas strike in Australia. In the past, the market was also affected by the loss of export capacity from the USA after a fire at the Freeport LNG.

– Many people think that the crisis is over, but the market is very balanced, so even a small interruption in deliveries will exacerbate the situation, she says.

Christian Gumas, CEO of Pareto, opens this year's edition of the Pareto Conference at a hotel in Holmenkollen.

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Huge income for Norway

Norway has made a lot of money from the energy crisis. States Net cash flowNet cash flowState income from taxes and fees on the oil industry, income from direct ownership in oil and gas fields through BiToro and dividends from Equinor From the oil and gas industry amounted to NOK 1,285 billion last year. This year’s cash flow is estimated at NOK 1.015 billion, according to Revised budget.

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This is much more than was common in previous years.

Equinor this year raised its earnings estimates for the Rommelhoff-run portion of the company.

The company is now expected to achieve adjusted results of between $400 million and $800 million per quarter.

It is possible that these high incomes will continue for a while, if Pareto is to be believed. Analyst Tom Erik Christiansen said Wednesday that we may be in a “supercycle” in energy, and investor Christian Sim expects a long-term rebound abroad.

He will become a client of his own

Going forward, Equinor will also become a major gas customer in its own right, notes Rummelhof.

Earlier this year, Equinor and German giant RWE entered into a partnership on German gas-fired power plants that are ready to convert to hydrogen. They want to supply power plants with hydrogen made from gas in Norway.

Norway and Germany are currently investigating the possibility of establishing a hydrogen pipeline between the two countries.

– I would say that the realism is great, as we have just seen that the Norwegian and German authorities have created a working group to further develop the hydrogen pipeline between Norway and Germany, says Rummelhof.

We are working on this as a development project, in the same way we work with oil and gas projects. So we have great confidence in this.

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– Approaching the year 2030

However, customers must be obtained for Norwegian hydrogen, and regulations must be put in place for transporting hydrogen between countries.

– Time-wise, we think we are getting closer to 2030 before that becomes realistic, says Equinor’s top.

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The central question here is whether it is profitable for companies participating in the global competition to switch from gas to hydrogen. They are expensive, because you lose energy during the conversion to hydrogen, and they require energy to store the carbon dioxide produced by the process.

– It will always be more expensive than gas, says Rummelhof.

The European Union is trying to solve this problem through carbon dioxide prices and… CFDsCFDsA support plan that ensures projects can be implemented earlier than expected For carbon dioxide, it indicates that. The European Union is also studying its own mechanisms to make the operation of hydrogen power plants more profitable.

– She says: – We see that competition between the United States and Europe also stimulates activity in Europe.

– Absolutely unparalleled

Just over a year ago, prices in Europe reached record highs, about ten times today’s gas prices. Today’s prices of between 30 and 40 euros per megawatt hour are also high compared to their historical levels.

– What happened in the gas market last year was completely unprecedented, says Rummelhof from the stage.

“I doubt anyone in this room will experience something similar in their lives,” she says.

It talks about the huge quantities of Russian gas that disappeared from the European market before and after the Russian attack on Ukraine in February 2022. Previously, Russia was the largest exporter of gas to Europe.

The loss of Russian gas led to an increase in liquefied natural gas imports from countries such as the United States of America. Many European countries have also asked Norway to produce as much gas as possible, including Germany.

“We are grateful for the support we get from Norway here,” German Vice Chancellor Robert Habeck said in a video speech to the Pareto Conference last year.

Dalila Awolowo

Dalila Awolowo

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