Jens Okland, a board member of Norway’s oil and gas giant Statoil, is part responsible for the company’s expensive pipeline network into Germany, France, Belgium and Britain. In an interview with Handelsblatt, he talks about why he feels Germany’s energy policy is on the wrong path.
Handelsblatt: Mr. Okland, the European Commission is working toward an energy union. What is your assessment of these plans?
Mr. Okland: The plans of the European Commission for establishing a European energy union go in the right direction. It wants to assure that the system for transporting natural gas through Europe becomes more integrated. An extensive infrastructure for providing gas increases security of supplies and leads to more flexibility and liquidity in the gas market.
What contribution can you make to enhancing the security of energy supply in Europe?
Norway has great potential. One third of the country’s gas reserves have already been extracted, one third can be mobilized by 2035, and a further third is available for the decades after 2035. These are substantial resources, so that production can be maintained at current levels for decades.
Gas markets are becoming global; other providers also stand ready.
Yes, but we have access to an existing and extremely good infrastructure, with pipelines to Germany, Belgium, France and Great Britain. We have to make significant investments if we want to exploit our gas reserves. Such investments only make sense if there is long-term, dependable demand. The existing pipelines provide a good basis for this.
Germany won't meet its climate targets if it doesn't force itself to stop using coal and come up with a coherent alternative.
Long-term delivery contracts would be the ideal solution for you. But that’s exactly what the European Commission doesn’t want.
We don’t need long-term delivery contracts. What we do need are dependable, long-term framework conditions regarding energy policy.
In the future, the European Commission intends to monitor agreements between countries at an early stage and even to take a look at commercial contracts in some cases. What’s your take on this?
It doesn’t worry me. If the political framework makes sense overall, then that’s fine.
What do you mean?
Let’s take the example of Great Britain. The British decided to stop using coal by 2025 and to assign a more important role to gas in the long-term energy mix. We can do our calculations on the basis of that sort of political decision-making.
Things aren’t so clear to us regarding Germany. Gas-fired power plants have big problems here and are being used less and less. We would like to see clear political signals in this regard. The current situation isn’t satisfactory. The fact is that gas plays an important role in Germany both for heating and in industry. There is stable demand in both segments.
Which political signals are you referring to?
These sorts of signals can come from a European or a national level. Take the European emissions-trading system. The present price level offers no incentive to switch from coal to gas. If the CO2 price were to rise, coal would become unprofitable and gas would be attractive. The world climate summit in Paris issued crucial guidelines. The decisions in Paris must now be filled with contents. A good opportunity is offered by the reform of emissions trading scheduled for this year.
What role can Germany play here?
Germany won’t meet its climate targets if it doesn’t force itself to stop using coal and come up with a coherent alternative.
What is your opinion about the addition of two pipelines to the Nord Stream Baltic pipeline?
From our perspective, care must be taken that gas from Russia can also reach markets that lie further to the east and south in Europe and are not yet linked to the northwest European gas infrastructure. An improved integration of the European gas infrastructure such as the European Commission is aiming at is the right path. In principle, of course, there is nothing to object to in additional pipelines from Russia into the European Union. We are in any case seeing more and more gas flowing to Europe, also increasingly as liquefied gas from throughout the world, including for example the United States in the future. Increasing supply tends to put downward pressure on prices. But we are ready to meet this challenge. Norway’s big advantage is its proximity to the European market. We intend to use this advantage in the future as well.
What role does liquefied gas play in your thinking?
At our natural gas field Snohvit near Hammerfest, we have a liquefied gas facility that is delivering outstanding performance. We sell the liquefied gas to the customer that offers the best price at the moment, and it is transported by ship throughout the world, also to European users. This business is doing quite well.
Klaus Stratmann is the deputy bureau chief of Handelsblatt in Berlin and covers the energy market. To contact the author: firstname.lastname@example.org