Equinor gets nod for strong Oseberg 2024-25 gas output
The Norwegian energy ministry has given the green light for a high Oseberg gas production quota for the 2024-25 gas year, but has concerns about the effect of an acceleration of gas exports on oil production.
While the ministry would not reveal to Argus how much gas it has permitted state-controlled Equinor to produce from Oseberg in October 2024-September 2025, other details from the permit approval letter suggest that the quota is again high. But the ministry has cautioned that Equinor must ensure maximum recovery of the oil in the main Oseberg Brent reservoir. It has ordered the field's operator to include an updated overall drilling plan in its 2025-26 permit application.
Gas blowdown has begun at the main parts of the Oseberg field, which involves a shift to gas production rather than gas injections as the amount of oil that can be profitably extracted declines. The gas production permit — for Oseberg, Oseberg Sor and Oseberg Ost combined — was 7bn m³ in each of the past three gas years including 2023-24, up from 5bn m³ in 2020-21 and 4bn m³ in 2019-20 (see graph).
The Oseberg licensees also plan to produce part of the gas in 2024-25 that has been "carried forward" from previous gas years. The Oseberg permit has flexibility within defined constraints — shareholders can under or overproduce against their quota and balance it out with higher or lower output in the following gas years.
To ensure sufficient gas production capacity to support its planned 2024-25 exports, Equinor initially submitted a request to the Norwegian Offshore Directorate (NOD) to accelerate two gas wells that it had previously planned to drill after two time-critical oil wells. Following discussion with the NOD, Equinor adjusted its plan and now aims to recomplete one gas well and speed up another gas well. Compared with the option of accelerating two gas wells, this entails a lower risk of the two oil wells being pushed back past the remaining time window for viable drilling, the ministry said. This balance between consideration of remaining oil and ensuring gas production capacity is "satisfactory", according to the NOD.
The ministry, after considering the directorate's advice, assessed that Equinor's requested 2024-25 gas production volume and drilling plan "support good resource management". But the ministry expressed concerns that Equinor's plan to delay drilling of oil wells to prioritise gas wells will mean that reservoir pressure becomes too low for profitable oil extraction.
The ministry specified that it is approving the 2024-25 gas production and drilling plan on the basis that Equinor will extract gas "to the greatest extent possible" from reservoir segments that have the least remaining oil potential, so that the pressure at oil reservoirs is maintained for as long as possible. Equinor must continue to monitor the reservoir, the ministry said. And it should take measures if gas extraction has unexpected consequences and inform the resource authorities of this, the ministry said.
The NOD emphasises that the Oseberg C facility has a shorter expected lifetime than the facilities at the Oseberg field centre. Since only Oseberg C can drill wells to the northernmost segment of Oseberg, called Alpha Nord, all necessary oil and gas wells for this segment must be drilled early enough for reserves to be produced before Oseberg C is shut down. Equinor must also investigate and implement other measures such as low-pressure production to achieve the greatest possible value creation from the Oseberg field, the ministry said.
Equinor must submit its application for a 2025-26 gas permit by 1 February. Its plan needs to include an updated overall drilling strategy, and it needs to be clarified with the ministry in good time for submission, the ministry said.
![](https://public-assets.argusmedia.com/2024/09/04/oseberggaspermitvproduction04092024122416.jpg)
Related news posts
Roadblocks across Colombia cut LPG supply
Roadblocks across Colombia cut LPG supply
Bogota, 5 September (Argus) — Colombia's LPG shortages are worsening as a fourth day of protests and roadblocks over higher diesel prices are limiting production and distribution. Protesters have completely blocked roads to processing plants in the key Cusiana and Cupiagua fields, preventing trucks from moving supply. Those two fields along with the Ty Gas processing plant handle 41pc of the country's LPG supply, LPG association (Agremgas) director Sara Velez told Argus . Colombia uses about 60,000 metric tonnes (t)/month of LPG. The Cusiana plant that produces about 15,000t/month of LPG is flaring 100t/d of LPG that cannot be transported, Velez said. "If Cusiana is unable to move out the LPG, it may force it to shut in, affecting natural gas as well," Velez said. Blockades are also preventing LPG produced at the 250,000 b/d Barrancabermeja and the 200,000 b/d Cartagena refineries from reaching distributors. The refineries produce 24pc of the country's LPG supply, equivalent to 14,400t/month. Adding to troubles, multiple rebel attacks have put sections of the country's 220,000 b/d Cano Limon-Covenas and the 120,000 b/d Bicentenario crude pipelines out of service for repairs, restricting crude supply to the refineries. The smaller LPG field of Capacho controlled by Canadian oil company Parex shut in 5,000 b/d of oil equivalent (boe/d), or about 10pc of its Colombian output. That reduced LPG supplies to the Arauca department, the LPG association added. The departments of Caqueta, Cundinamarca and Valle del Cauca have inventories for four days. Another 28 departments have LPG inventory for one or two days. Velez has called on the government to create a safe corridor to help LPG reach consumers. The LPG shortage is also affecting industries. Fenavi, the country's poultry association, consumes 42mn kg/yr of LPG, which is equivalent to state-controlled Ecopetrol's monthly LPG production. The LPG is used to warm the poultry, but the association also said that blockades have also cut supplies of feed and could put the chickens at risk of starvation. The country produces 1.8mn tonnes/yr of chickens and 1.6bn eggs/yr. In Colombia 1.2mn families already still cook with wood, and the current shortage will likely increase that number. By Diana Delgado Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
EU gas-fired power output down in Aug
EU gas-fired power output down in Aug
London, 4 September (Argus) — EU gas-fired power generation fell on the year in August, even as above-average temperatures bolstered power demand. EU gas-fired output was 27.7TWh in August, making up 14.4pc of the generation mix, according to data from Fraunhofer ISE. EU gas-fired output was 29.3TWh a year earlier and 36.8TWh in August 2022. Spain and France drove the overall EU drop. Spanish gas-fired generation fell to 4.1TWh from 5.6TWh, as renewable generation rose on the year. French generation dropped to 626GWh from 1.6TWh as nuclear output increased. Italy partly offset this fall as gas-fired output increased to 9.6TWh from 7.7TWh. Gas-fired generation in Germany edged up to 3.2TWh from 2.9TWh. In Italy and Spain, usually the two EU countries with the highest summer gas-fired generation supported by strong demand for cooling, average maximum temperatures in Rome and Madrid were almost 3°C above 10-year averages. Maximum temperatures in Athens were also nearly 3°C above 10-year averages. Above-average temperatures boosted power demand for cooling. Total power demand last month hit 193.6TWh across the EU, up from 190.2TWh in August 2023, but still down from August in every other year since at least 2015, as shown by Fraunhofer data. Given the above-average temperatures — especially in southern Europe — and the growing use of air conditioning, the drop in power demand from pre-2023 might have been driven by weaker industrial consumption. Energy-intensive industries across Europe have continued to struggle this year with high energy costs and muted demand. German power demand in August was 36.9TWh, the lowest since at least 2010, apart from last year. And the decrease in gas-fired generation despite higher year-on-year EU power demand came as a result of higher nuclear and renewable output, the latter of which increased to 87.5TWh from 82TWh in August 2023, driven by strong solar output of 31.6TWh, up from 23.8TWh. Nuclear output rose to 51.6TWh from 46TWh, supported by increased French nuclear generation as nuclear unavailability decreased to 19.3GWh from 27.6GWh a year earlier. Coal-fired generation was down by almost a quarter in August from a year earlier, falling to 6.9TWh from 9.1TWh. Clean day-ahead spark spreads for 55pc gas-fired units held a premium to equivalent dark spreads for 40pc-efficient units on most days in August in Germany, France and Italy. This suggests there was an incentive for firms to boost gas-fired generation over coal-fired generation, at times of low renewable output. By Lucas Waelbroeck Boix Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan’s 2023-24 oil, gas equity output recovers
Japan’s 2023-24 oil, gas equity output recovers
Tokyo, 4 September (Argus) — Japan's domestic and overseas oil and gas output rose during the April 2023-March 2024 fiscal year, mostly on the back of development of LNG projects abroad. Japan's equity output of oil and gas totalled 1.625mn b/d of oil equivalent (boe/d) for 2023-24, up by 2.9pc from the previous year's 1.578mn boe/d, according to data released by the country's ministry of trade and industry (Meti) on 3 September. The higher output was largely because of development of overseas LNG projects, Meti said, without disclosing further details. Output possibly recovered because the US' 15mn t/yr Freeport LNG export project fully resumed loading cargoes in February 2023 after it halted operations following a fire in June 2022. Japanese offtakers, including power producer Jera and gas retailer Osaka Gas, have stakes in the project. Increased equity output lifted the portion of Japan's total requirements to 37.2pc, up by 3.8 percentage points from a year earlier, Meti said. Japan is targeting to raise the ratio to over 50pc by 2030-31 and more than 60pc by 2040-41. Meti also attributed the output ratio increase to Japan's reduced demand for crude during 2023-24. Japan is strengthening the government's direct involvement in upstream gas investments overseas with a more aggressive financial approach. Meti has almost doubled its request for the country's fiscal investment and loan programme (FILP) on exploring upstream opportunities for LNG and minor metals to ¥122.4bn ($844mn) for the 2025-26 fiscal year, according to Meti's preliminary data released on 31 August. FILP aims to mobilise investment in areas, which are "too risky to be funded by the private sector alone", according to the country's finance ministry. Meti could be shifting its finance resources for upstream investment to FILP from the general account budget. The ministry cut its budget request for exploring oil and gas and/or buying related assets by more than half to ¥48.6bn for 2024-25. Financing more capital expenditure through FILP suggests that the country is strengthening its involvement in projects, since the programme requires increased profitability and involves more risks compared with allocations from the general account budget. By Yusuke Maekawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Limited interest in Finnish Inkoo LNG slots for 2025
Limited interest in Finnish Inkoo LNG slots for 2025
London, 3 September (Argus) — The operator of Finland's Inkoo LNG terminal sold only half the 2025 slots offered this summer, with market participants citing high costs and an extensive maintenance schedule. Operator Floating LNG Terminal Finland (FLTF) allocated only 11 of 22 slots of 950GWh offered for 2025 during its annual procedure on 15 July-15 August . How slots are distributed is still being determined, as "at this stage, reservations have been made according to the number of slots, and only at the scheduling stage will we see how the reserved slots will be scheduled for next year", FLTF commercial manager Rasmus Hellman said. "The terminal hopes that the slots will be evenly distributed throughout the year." Concerns over ice build-up mean there is usually little demand for first-quarter slots, with none booked during the terminal's first few months of operation at the start of 2023. Last winter was exceptional in that the Balticconnector pipeline was offline in October 2023-April 2024 following a rupture caused by a dragging anchor. This meant Inkoo was fully utilised during the period. With Balticconnector's return, Finland's import needs will be much lower this winter, particularly with stocks at Latvia's Incukalns facility high for this time of year at 17.8TWh as of Monday morning. This is still below last year's peak of nearly 18.8TWh on the same date, but well above the 2014-22 average of 13.9TWh. That said, several market participants noted that one or two slots could still be booked for the first quarter, as Balticconnector's capacity towards Finland is only 70 GWh/d, and on particularly cold days Finnish demand can spike to 131GWh — as on 4 January this year (see data and download) . Given Finland's lack of domestic storage, the terminal might be needed to help to balance the system during such cold snaps. Cargoes in the first quarter come at a much higher cost because only the highest ice-class vessels — controlled by just a few owners — can deliver to Inkoo. These slots can be booked at shorter notice, based on weather conditions or profitability, market participants said. Market participants pointed to Inkoo's high costs as the most significant deterrent, with a regasification tariff of €2.46/MWh as well as a €10,000 loading fee and other charges not levied at other terminals. Several also noted Inkoo's limited flexibility — the 151,000m³ Exemplar FSRU is smaller than Klaipeda's 170,000m³ Independence FSRU, leaving less scope to use Inkoo for storage because it has to be virtually emptied before a new cargo can be discharged. And fuel gas rates are a significant expense. If regasification nominations are above 64 GWh/d, fuel gas costs are capped at 3pc, with the operator paying the rest. But if regasification is below this level, the user is responsible for all fuel gas consumed, Hellman told Argus . A third concern at Inkoo is its 2025 maintenance schedule — the Exemplar 's drydocking will take the terminal off line on 14 August-31 September, while Balticconnector maintenance will also limit terminal utilisation, with just 5 GWh/d of capacity from Finland to Estonia available in June. An inability to send much gas south for storage or sale in the Baltic states means sendout must fall to the low levels that can be absorbed by the Finnish market — Inkoo sendout dropped to 32 GWh/d during similar maintenance in July this year from 87 GWh/d in June. With the drydocking, terminal utilisation will be severely curtailed for around 75 days next year. Market participants cite other difficulties with using Inkoo, including limited daylight hours and wind restrictions. Strong winds delayed a delivery in February , causing commercial stocks at the terminal to fall to dangerously low levels. Almost all market participants surveyed by Argus said many of the difficulties at Inkoo do not apply at Klaipeda, where the regasification tariff is also 29pc lower, at €1.84/MWh for 2025. But there is a lack of available slots at Klaipeda because of heavy long-term bookings, and at times severe capacity bottlenecks develop at the Latvian border point of Kiemenai, which can have similar effects on terminal utilisation as the Balticconnector does for Inkoo. By Brendan A'Hearn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
![Generic Hero Banner](/_next/image?url=%2F-%2Fmedia%2Fproject%2Fargusmedia%2Fmainsite%2Fimages%2F14-generic-hero-banners%2Fherobanner_1600x530_generic-c.jpg%3Fh%3D530%26iar%3D0%26w%3D1600%26rev%3D8ec86dce0f724687bd325a9a917cffae%26hash%3D9FD39B08C9D84A160C91A3649C40A186&w=3840&q=75)
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more