Gas Market Volatility in Europe: An Analysis by Anders Opedal

Gas market volatility in Europe is a growing challenge, influenced by the closure of the Groningen gas field and increased dependence on Norwegian supplies. Against this backdrop, Equinor CEO Anders Opedal said on October 18 that he expects the European gas market to be “quite volatile” over the coming winter, despite high levels of storage. Speaking at the Energy Intelligence Forum, Opedal pointed out that Europe now has less ability to increase or reduce gas supply at will, depending on demand, than in the past.

The Consequences of the Closure of Groningen

The gigantic Groningen gas field, once a highly flexible source of gas production for Europe, has been shut down, while Norwegian production is set to be maximized over the winter. Norway has become Europe’s largest single gas supplier following the collapse of Russian supplies.

Norwegian Supply on the Front Line

Opedal also spoke of the continent’s dependence on global LNG (liquefied natural gas) markets and fluctuations in renewable energy production. He said the weather was “the most important element at the moment”, adding, “We know that gas storage is pretty good at the moment and that Europe is in a much better situation than last year, but there are a lot of variables around the gas market at the moment.”

Global competition for LNG

“At the moment, we don’t think we have enough resources to really build a pipeline, so we’re very pleased that the Norwegian government has set up more exploration zones, especially around existing infrastructure,” said Opedal.

Fluctuations in Renewable Energy

Norwegian authorities are currently evaluating license applications from 25 companies as part of an annual process known as Awards in Predefined Areas, with awards scheduled for early 2024. “The Norwegian government is looking at this pipeline project, we support it, but it will depend on the resource base to trigger such an initiative – we’re not there yet,” said Opedal. “Obviously, with new infrastructure in the Barents Sea, there is a cost and we have to find very cost-effective ways of doing it.”