OGV Energy's Europe Energy Review March 2022

New oil and gas projects in Norway’s offshore industry and many green energy developments across the UK and Europe were the highlights in the energy sector in Europe over the past month, as tensions remained high in the Russia-Ukraine crisis.   

Oil & Gas

Germany halted the Russia-led gas pipeline project Nord Stream 2 after Russian President Vladimir Putin recognised two separatist regions in eastern Ukraine and deployed troops there.

“We now have to reassess the dramatically changed situation: This also applies to Nord Stream 2,” German Chancellor Olaf Scholz said on 22 February, adding that “The certification cannot take place now.”

The pipeline construction is complete, but Nord Stream 2 was awaiting regulatory clearance from Germany and a review by the European Union over its compliance with EU energy regulations. In wake of the escalation in Ukraine, Germany suspended the certification process. 

Italy’s Eni and Point Resources Holding, shareholders of Norwegian oil producer Vår Energi AS with 69.85 percent and 30.15 percent, respectively, said at the end of January they intend to launch an initial public offering for Vår Energi and for the company to apply for a listing on Oslo Børs. The IPO will provide access to the Norwegian and international capital markets, allow the company to diversify its ownership structure, and create a strong long-term shareholder base, Eni said.

“The operation is part of Eni's strategy of enhancing its assets in order to free up new resources to be allocated to accelerate the energy transition strategy,” the Italian major noted.

Norway’s Minister of Petroleum and Energy, Marte Mjøs Persen, officially opened Equinor’s Martin Linge field, which came on stream in June 2021.

“The field is now producing very efficiently. With current prices, investments in the field will be recovered in full during 2022,” said Equinor’s CEO Anders Opedal.

In a setback for its LNG project, Equinor announced at the end of January that the start-up of Hammerfest LNG plant was pushed from 31 March 2022 to 17 May 2022, “due to continuing consequences from Covid-19 and operational restrictions.”  

Equinor also said that the Wisting project in the Barents Sea is expected to take up investments in the range of NOK 60 – 75 billion ($6.7 billion - $8.4 billion) as it presented an impact assessment of the field’s development and operation. Equinor expects to finalise the development and operation (PDO) plan at the end of 2022. The Wisting discovery is of considerable size, containing close to 500 million barrels of oil equivalent, the company says.

“The chosen concept is robust and adapted to Barents Sea operation, while at the same time well suited for Norwegian suppliers to be able to compete for major assignments,” said Siv Irene Skadsem, vice president for new assets on the Norwegian continental shelf (NCS).

Another major producer on the NCS, Aker BP, said in early February that the Norwegian Ministry of Petroleum and Energy had approved the Plan for development and operation for Kobra East & Gekko (KEG) in the Alvheim area. The KEG development will help extend the lifetime of the Alvheim field, improve production, and reduce unit costs, said Aker BP, operator of the field. Total investments in the project are expected at around NOK 8 billion (close to $1 billion) and production is scheduled to start in the first quarter of 2024. Recoverable reserves in KEG are now estimated at around 50 million barrels of oil equivalents.

Aker BP plans to drill 13 exploration wells in 2022, with unrisked volume potential estimated to around 250 mmboe net to Aker BP, the company said in its Q4 results and 2022 outlook release.

Services provider Aker Solutions raised its 2022 full-year guidance as it expects a tight supply-demand balance to result in an attractive investment environment for the company’s customers, supported by greater confidence in the oil-price environment. Based on the secured backlog and market activity, revenue is now seen up by more than 20 percent from 2021.

Low-Carbon Energy

The number of green jobs in Scotland has fallen in recent years, according to data from the Office of National Statistics (ONS) through 2020.

The number of estimated full-time equivalent jobs in Scotland’s “low carbon and renewable energy economy” fell from 21,700 in 2019 to 20,500 in 2020, a figure which is down from 24,000 back in 2016, the Low Carbon and Renewable Energy Economy Survey showed.

The Scottish Trade Union Congress (STUC) called for actions to boost green job growth. 

“Workers were promised the Saudi Arabia of renewables, but all they got was a desert,” STUC General Secretary Roz Foyer said.

“We are getting sick and tired of reading promises of a bright new green jobs future when the truth is we have fewer than we did eight years ago, and the number continues to fall.”

Crown Estate Scotland announced on 22 February the proposed details of its Innovation and Targeted Oil and Gas (INTOG) offshore wind leasing process. Under this process, developers will apply for the rights to build small-scale innovative offshore wind projects of less than 100 MW, as well as larger projects connected to oil and gas infrastructure, to provide electricity and reduce the carbon emissions associated with those sites. 

The European Parliament called for increasing offshore renewable energy sources in a report MEPs voted in mid-February on how to deploy offshore wind more quickly.

The report stresses that meeting the 2030 and 2050 targets requires faster deployment of offshore renewable energy, but maritime space and coasts must be managed more sustainably, the European Parliament said.

The UK and Scottish governments announced on 14 February an agreement to establish two new Green Freeports in Scotland. The new hubs will support the regeneration of communities across Scotland and will bring jobs and prosperity, the UK government said, adding that the Green Freeports will have net-zero targets at the heart as prospective bidders will have to make a pledge to reach Net Zero by 2045.

“Major sea port operators are absolutely committed to developing freeports that deliver regeneration, high quality jobs and support the transition to a net-zero economy,” said Tim Morris, CEO of the UK Major Ports Group, which welcomed the agreement.

The UK will need up to 24 GW of Long Duration Electricity Storage (LDES) – equivalent to eight times the current installed capacity – to integrate wind power into a secure Net Zero electricity system, a new report from Aurora Energy Research showed in February.

Additional policy is needed for large-scale deployment of LDES in Great Britain, the report found. In addition to direct support such as establishing an adapted Cap & Floor mechanism, investments in LDES can be enabled by reforms to strengthened market signals, the research said.  

The report was commissioned by Engie, SSE, National Grid ESO, Copenhagen Infrastructure Partners (CIP), Highview Power, Foresight, Gilkes Energy, Drax, Invinity Energy Systems, Field, and Intelligent Land Investments Group.  

In company news, Nuseed and bp entered into a 10-year strategic agreement enabling Nuseed to accelerate the expansion of its Nuseed Carinata sustainable production program. Under the agreement, bp, or its affiliates, will purchase Nuseed Carinata oil to process or sell into growing markets for the production of sustainable biofuels. 

Lightsource bp targets to increase its presence in Italy by investing in the country’s Central North regions. Lightsource bp, an equal joint venture between Lightsource and bp, has signed partnerships with Solar IT and TEP Renewables for a total of 400 MW of photovoltaic projects, of which 163 MW are expected to enter into operation between 2023 and 2024.

bp has also bought a 30-percent stake in Green Biofuels Ltd (GBF), the UK’s largest provider of hydrogenated vegetable oil (HVO) and will work with the company to help decarbonise businesses across the construction, freight, off-road, and marine industries. 

Aberdeen City Council’s city growth and resources committee decided in early February to pick bp to be the Joint Venture partner to deliver the ambitious Aberdeen Hydrogen Hub which will build a solar power facility connected to a green hydrogen production and refuelling facility.

Eni UK has signed 19 memoranda of understanding (MoUs) with as many companies interested in the opportunity to have their emissions captured, transported, and stored in Eni UK’s depleted hydrocarbon reservoirs as part of the HyNet North West project, the Italian energy firm said in early February.

ILI Group has started the initial planning phase for a Pumped Storage Hydro project at Loch Awe, which will be able to supply 1.5 GW of power for up to 30 hours, enough to power 4.5 million homes and could offset 200 Million tonnes of CO2e over its lifetime.

Octopus Hydrogen and BayWa r.e. have agreed to collaborate on innovative green hydrogen production facilities at renewable project sites across the UK. The strategic partnership will see Octopus Hydrogen install electrolysers, compression, and mobile hydrogen storage alongside selected BayWa r.e. solar and wind projects.

Neptune Energy and RWE are accelerating green hydrogen production in Dutch North Sea by agreeing to develop the offshore green hydrogen project "H2opZee" ahead of 2030. H2opZee is a demonstration project which aims to build 300-500 MW electrolyser capacity in the North Sea to produce green hydrogen using offshore wind. The hydrogen will then be transported to land through an existing pipeline.

Sweden’s Vattenfall and Norwegian company Seagust have formed a joint venture to bid for offshore wind areas in Norway’s upcoming licensing rounds expected to take place this year. The joint venture intends to bid on licences in both the Utsira Nord and Sørlige Nordsjø II areas in the North Sea. The joint venture represents Vattenfall’s entry into the Norwegian wind power market.  

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