Norway worried by gas liberalisation issue

Date: 23/10/1997

By Chris Johnstone

EU OUTSIDER Norway is lobbying hard to get the sort of liberalisation it wants from the current negotiations over opening up the Union's gas supply and distribution sectors to competition.

As ministers prepare for a special meeting on gas liberalisation next Monday (27 October), with the Luxembourg presidency's hopes of sealing a broad agreement looking increasingly over-optimistic, Norway's problem is one of a series that still have to be solved.

Norway, the biggest gas exporter in western Europe with huge sales to France and Germany, is looking to double its gas production over the next few years and is already signing up new contracts with the Dutch, Czechs and Italians.

But it is worried that the latest Luxembourg proposal for market opening goes a step too far by allowing gas suppliers to demand access to offshore pipelines taking gas from platforms. The principle of open access to land-side pipelines is widely accepted as a keystone for boosting competition.

“We are worried this proposal will erode our system for regulating such access issues,” said a Norwegian official.

Oslo would be obliged to take on board the gas liberalising measure whether it wanted to or not because of its membership of the European Economic Area (EEA).

Norway argues that offshore pipelines should be left outside the scope of the directive. It has a system which already allows gas producers awarded licences to exploit fields to have access to each other's pipelines, but excludes non-producers from the arrangement.

“It is the concept that worries us. We do not know whether there will be much interest in this possibility of access from gas distributors,” explained the official.

The UK, Italy and the Netherlands, which all have offshore gas production, share some of Norway's worries on the issue of offshore pipeline access. “It is the UK which is closest to our position,” added the official.

Norway is also waiting anxiously to see what decisions will be taken on long-term contracts between gas producers and suppliers: so-called 'take-or-pay' contracts. Norway has signed a series of such contracts with European companies and believes they should continue to be a part of the gas sector scene after liberalisation, since they provide a guarantee of stable demand and supply.

EU governments agree that take-or-pay contracts will continue to play a role in the liberalised market, but are deeply divided over how these contracts should be regulated to prevent them impeding competition. Germany wants national regulators to vet such contracts while the UK is pushing for the Commission to take on the role of independent arbitrator.

Europe's biggest gas companies are mostly in favour of some protection to temper competition since they fear being signed up for years of production at prices way above market levels.