Statoil Gas Sales to Europe Hit Record

From The Wall Street Journal

By Kjetil Malkenes Hovland and Selina Williams

Norwegian energy company Statoil ASA said Thursday it sold record volumes of natural gas to Europe in 2012, capturing a greater share of an otherwise moribund market by adopting more flexible pricing than its main rival, Russia’s OAO Gazprom.

Statoil’s trend-defying growth reflects how the European economic crisis has shifted the established order in the continent’s energy market, eroding Gazprom’s pricing power and benefiting faster-moving rivals.

“Statoil is being flexible and maximizing value rather than being a victim of the market,” said Brendan Warn, managing director of energy equity research at Jefferies.

Declining economic activity and the debt crisis have reduced annual gas demand from the 27 European Union member countries by more than 10% between 2008 and 2012, according to a Statoil presentation.

Despite this, Statoil’s gas sales to the continent grew approximately 10% in 2012 and the company achieved its highest average selling price ever, said Eldar Saetre, Statoil’s head of marketing, processing and renewable energy, at a briefing in London.

It has achieved this by taking advantage of a major natural gas pricing divide in Europe.

Lower demand has kept a lid on prices on natural gas trading hubs on the continent, on which Statoil sells a growing proportion of its gas. Meanwhile, the cost of imports from Europe’s largest gas supplier, Gazprom, has remained elevated because it is directly linked to the high price of oil in long-term contracts.

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