The Norwegian government has increased the production cap for natural gas for 2022 by 8%. According to Minister for Oil and Energy, Terje Aasland, the increase equals to an extra 100TWh of energy content.
The increase will be split between pipeline deliveries and production of liquid natural gas, LNG, at the facility outside Hammerfest.
After Russia, Norway is Europe’s second largest supplier of natural gas. News of the Norwegian production increase is expected to cool off the price hike that followed proposals for new European sanctions against Russia, and Russia’s decision to cut deliveries of natural gas to Poland and Bulgaria.
On April 28th, Oilprice.com reported that German utility company Uniper had agreed to pay for Russian natural gas in rubles. Their decision came in spite of European Commission President Ursula von der Leyen urging businesses in the EU not to accommodate the Russian ruble-payment demands.
The Norwegian increase in natural gas production follows the pull-out of state-owned energy production company Equinor from Russia. Already before the reported increase in gas production, Equinor had posted record revenue for the first quarter of 2022.
The Russian war in Ukraine has had significant influence over natural-gas prices in Europe. However, over the long term, taxes have also contributed to a rise in the price of gas at the household point of consumption. According to Eurostat, the household-point price of natural gas increased by 2.5% from 2011 to 2021 before taxes and other government levies. During the same period of time, the price including taxes and levies went up by 9.8%.
In 2011 taxes accounted for 28% of the price. In 2021 that share had increased to 33%.
Sven R. Larson is a political economist and author. He received a Ph.D. in Economics from Roskilde University, Denmark. Originally from Sweden, he lives in America where for the past 16 years he has worked in politics and public policy. He has written several books, including Democracy or Socialism: The Fateful Question for America in 2024.