Europe taps Norwegian gas
The biggest gas contract of the century was signed late last month between the Norwegian state oil company, Statoil, and a European purchasing consortium, including France, West Germany, Belgium, the Netherlands, Luxembourg, and Italy. Under the terms of the $65 billion deal, Norway will furnish close to 25 percent of these countries' gas needs -- up to 20 billion cubic meters a year -- until the year 2020. According to West Germany's Ruhrgas company, which led the negotiations, it is the most ``far reaching'' gas contract ever signed.
Officials cite strategic as well as economical considerations in the choice of Norway. The Organization for Economic Cooperation and Development and the International Energy Agency (IEA) have long been encouraging Europeans to diversify their energy sources and become less dependent on outside gas sources such as the Soviet Union and Algeria.
``It is a major step towards improving the long-term energy security of Western Europe,'' says IEA director Helga Steeg.
Since renegotiating a gas contract with Algeria in the early 1980s at higher-than-market prices, France and Italy have been trying desperately to renegotiate the price of Algerian gas.
The fact that alternative gas is available from the new Norwegian fields will undoubtedly strengthen France's hand in meetings coming next month with Sonatrach, the Algerian gas monopoly.
Present contracts cover European needs until the mid-1990s, when Norwegian gas from the new Troll and Sleiper fields will begin to flow.
To date, the Soviets are still the No. 1 supplier of Europe, with nearly 30 percent of the market, as opposed to the 11 percent provided by the Norwegians.
The Norwegians will not significantly increase their share of the gas market for European countries as a whole unless other European countries such as Britain, Switzerland, Spain, and Italy decide to join the consortium. The Norwegians will simply replace depleted fields with the new ones. But they had to be assured of the market before going ahead with the $8 billion project to tap the new sources.
The Troll field, Europe's second-largest reservoir, is some 50 miles west of Bergen at icy depths of 1,200 feet below the sea.
Getting the gas to the customers will require huge platforms and a 700-mile-long seabed pipeline to hook up the fields to Zeebrugge, in Belgium, and to the already existing line at Emden, in West Germany.
The difficulty in extracting the gas will not jack up its price, according to Statoil officials. The price is indexed to other energy sources, mainly oil, ``but the unit price will be roughly the same as that of Russian gas,'' affirms Hakon Lavik, Statoil spokesman.
Strangely, the contract came through at a time when oil prices had fallen. But many energy experts have predicted an increase in gas needs in the next decade, and Europeans appear to be preparing for those needs today.