Europe\u2019s second-largest gas supplier plans to keep pumping natural gas even after prices dropped to their lowest in more than a decade. The region\u2019s benchmark slid 50% in the past year after a mild winter left inventories brimming and more cargoes of liquefied natural gas flooded the market. Yet that\u2019s not putting off Equinor ASA, the Norwegian state-owned producer, which delivers about a fifth of the European Union\u2019s pipeline gas imports. \u201cIf someone is hoping for supply relief coming from Norway, we will have to disappoint them,\u201d Tor Martin Anfinnsen, the state-owned company\u2019s senior vice- president for marketing and trading, said in an interview in Essen, Germany. \u201cWe will be the last ones to turn off the taps. We are far away from reducing flows.\u201d The unwillingness to cut flows may seem surprising, considering that Equinor is one of the most exposed oil companies to European and US spot natural gas prices, according to Sanford C Bernstein & Co, which sees the company\u2019s gas earnings fall by about \u20ac300mn ($326mn) in 2020 if prices don\u2019t change from current levels. But both Equinor and its larger Russian rival Gazprom PJSC may be focusing on preserving market share as competition heats among LNG suppliers. Equinor\u2019s gas production \u201cis very cost-competitive,\u201d Anfinnsen said. The company said it continues its normal practice, which is to optimize prompt versus forward markets according to demand signals within the flexibility limits under its license permits. Norway\u2019s pipeline exports of natural gas to continental Europe and the UK fell to 107bn cubic meters in 2019 from 114bn cubic meters the year before as Equinor and other producers choose to hold back volumes amid the bad market conditions, according to Norwegian Petroleum Directorate. Benchmark next-month gas in the Netherlands has dropped to about \u20ac8.70 a megawatt-hour ($2.75 a million British thermal units), the lowest since August 2009. Norway\u2019s marginal production cost is about \u20ac6 a megawatt-hour and Russia\u2019s is around \u20ac8, according to six traders and analysts consulted by Bloomberg since Tuesday at the E-World conference in Essen, Germany. \u201cEven if prices achieve levels below Norway and Russia\u2019s marginal cost of production, these countries usually have long-term strategies for gas supply,\u201d Frank van Doorn, head of trading at Sweden\u2019s Vattenfall AB, said in an interview in Essen. \u201cI am not sure if they would have a quick answer to low prices.\u201d Even the coronavirus may weigh down on European gas if more Chinese buyers declare force majeure on LNG supplies, leaving the potential for increased imports of the chilled fuel into the region, van Doorn said. \u201cIt is hard to find a bullish factor for natural gas right now,\u201d he said. \u201cIt can take more than two years until we see an upside move.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
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