Report on "A better working LNG market"

A broadly assembled working group consisting of eight members has prepared a report regarding the LNG market in Norway.

Publisert 14.10.13

NOx

The Norwegian Authorities will soon consider how the EU Gas Directive shall be implemented in Norway when the deadline for the ten year long exception expires April 10th 2014.

The working group's report discusses the conditions for implementing the Gas Directive in the Norwegian LNG market, and what possible increased opportunities this could have towards the use of LNG and the concomitant decrease in air emissions. The development in the international gas market is heading in the same direction. 

Distribution of LNG

The distribution system of LNG in Norway could constitute a common infrastructure in a deregulated LNG market.  This will lead to competition on same terms for both present and new suppliers on the market to the advantage of enterprises buying LNG or considering doing so in the future. Increased sale of LNG from 2011 to 2016 is expected to reduce the distribution costs of LNG by 30 per cent. Simultaneously, the price of MGO could increase by as much as 25 per cent when the IMO and EU's restricted sulphur-requirements enters into force 1st January 2015. This presents an opportunity to increase the sale of LNG, provided that the cost advantage will reasonably benefit the customers. Therefore, the majority of the working group sees it as both necessary and desirable to open up for competition in the LNG market. Norway is headed towards having to import half of the LNG it is using from European harbours within 2016. Hence, linking the prices for sale of LNG in Norway to markets in e.g. Netherlands (TIFF) is entirely natural for customers wanting that. This is the most common way to sell LNG in Norway today.

 

Infrastructure

Enterprises considering using LNG emphasizes the regional monopolies and concomitant lack of competition, as well as the poorly developed infrastructure to fill LNG as important reasons not to implement LNG. Hence, organizing the Norwegian LNG market better and establishing an infrastructure company in charge of infrastructure and tariff classification of LNG sales and purchases, is an important function. Today, Statnett and Gassco have these functions in the power market and in the Norwegian pipework aimed at gas export.  Moreover, the report points out the need for such an infrastructure company to maintain the concern for the security of supply in the Norwegian LNG market. This type of solution will present operational challenges which will have to be solved, but it will also facilitate increased sales of LNG in Norway, to the advantage of both the suppliers and users of LNG. The environmental effects of this are positive when it comes to CO2, NOx, SO2 and particles.

 

The working group's members

The members are appointed based on their expert knowledge and for this reason do not express views necessarily rooted in that of the organisations suggesting them. The working group's member from Gasnor claims that the Gas Directive only includes terminals for LNG connected to a system of piping – a view that neither the working group shares, nor has professional support through the independent legal assessment attached to the report.