Norway rejects EU demand to cap gas prices and calls for commercial frameworks

Scandinavian country has become Europe’s most important gas supplier

European Commissioner for Energy Kadri Simson, left, talks with the director of the Swiss Federal Office of Energy Benoit Revaz, centre, and Norwegian Petroleum and Energy Minister Terje Aasland before the start of an informal meeting of European energy ministers in Prague, Czech Republic. AFP
Beta V.1.0 - Powered by automated translation

Norway on Thursday called for “commercial frameworks” instead of gas price caps, as Europeans suffer from record energy prices caused by the war in Ukraine

The war has financially benefited Norwegian energy companies following an increase in the country's pipeline gas exports to Europe.

“I think the most reasonable way to handle the future and also the special situation is to have a commercial framework where the companies meet and have contracts for gas and energy,” Norway’s Minister of Petroleum and Energy Terje Aasland said during a joint press conference in Oslo alongside European Commissioner for Energy Kadri Simson.

Mr Aasland said that capping gas prices was outside of the Norwegian government’s mandate because companies, not the state, export gas to Europe.

Yet he stressed that “we are also deeply concerned in Norway about the high prices for gas and electricity”.

“We are in a common boat,” he said.

Norway has become the most important gas supplier to the EU and currently represents 25 per cent of all natural gas imports, Ms Simson said.

The EU has cut pipeline imports from Russia since it invaded Ukraine in February, from 45 per cent of its liquefied and pipeline gas imports last year to 14 per cent in September.

The Norwegian state has a 67 per cent stake in one of the country's largest energy companies, Equinor. The state taxes national petroleum companies at a rate of 78 per cent of their net profits. Total estimated tax payments from petroleum activities are expected to reach about 572.6 billion kroner ($55.8bn) this year and 846.4bn kroner ($82.4bn) in 2023.

“We have to find solutions that help us to calm down the gas market in the way that our consumers and businesses can keep operating and will not lose their level playing field against each other on global markets,” said Ms Simson.

The EU representative thanked Norway for increasing its gas exports to Europe but added that, at the same time, “we both agree that these current unstable and unsustainable price levels will have an impact on our economy”.

European Commission President Ursula von der Leyen in late September announced that the EU and Norway had set up a dedicated task force to lower prices “in a reasonable manner”.

The Norwegian prime minister’s office told The National at the time that the aim of the task force was to “to contribute to good decisions that can help alleviate the effects of the crisis in the European energy market”.

Both Ms Simson and Mr Aasland stressed that the EU and Norway were like-minded partners and allies with common interests, but they failed to give concrete solutions to their differences over gas prices.

“It’s important to keep on the dialogue,” said Mr Aasland, while Ms Simson added that she was “strongly convinced that there are solutions for this difficult situation”.

Asked what the solution might be, Ms Simson laughed and answered, “tomorrow’s news”, seemingly hinting at a forthcoming announcement.

Ms Simson said that her meeting with Mr Aasland was not aimed at replacing the work of the EU-Norway task force.

The European Commission is currently working on technical proposals, including a platform for joint gas purchases, to lower energy prices. Its proposals will be presented to European energy ministers during a meeting on November 24.

Ms Simson did not rule out announcements from the commission before November 24.

“Under these emergency measures, everything is possible,” she said.

Updated: October 27, 2022, 4:07 PM