United Kingdom

New Energy partnership between UK and Norway


Published

A new energy partnership has been signed between UK Prime Minister David Cameron and his counterpart Prime Minister Jens Stoltenberg of Norway. The following energy companies were present at the signing; Fred Olsen, Gassco, Aker Solutions, National Grid, NorthConnect, Shell, Statoil, Statnett, Statkraft and Centrica.

The official announcement on the UK prime ministers website outlines the following commercial agreements:

Commercial announcements include:

• Norwegian global oil services firm Aker Solutions will create 1,300 new highly skilled jobs by 2015 at its engineering hub in Chiswick. This comes on top of 1,000 new jobs it has already created in the UK over the past two years;

• Statoil intends to invest a further £12 billion over the lifetime of the UK’s Mariner-Bressay North Sea oil fields in addition to the £6 billion they have already announced. This will lead to the creation of up to 300 new jobs in the UK in the next few years, including at a new operations base in Aberdeen, in addition to 700 UK jobs from this investment that have already been announced;

• A new Memorandum of Understanding has been agreed between Statoil and Centrica to continue cooperation on gas supply and exploration. This builds on the £13 billion, ten year gas supply deal agreed between the two companies last November and follows the recent completion of a £1billion asset deal between the two companies that will increase Centrica’s oil and gas reserves by 29 percent;

• The Forewind Consortium, which includes Norwegian companies Statoil and Statkraft, has confirmed its intention to develop the 9GW Dogger Bank offshore wind project off the East coast of Yorkshire, which could require up to £30 billion of investment. This project could provide more than 10% of the UK’s electricity needs. In addition to this project Statoil and Statkraft are investing around £1billion in developing the Sheringham Shoal offshore wind farm off the coast of Norfolk, which is already generating power and will be completed later this year. It will provide power to more than 200,000 UK homes when fully operational. The project employs 500 workers in the field and provides significant secondary employment;

• Good progress is being made in two projects to build one of the world’s longest subsea electricity interconnectors between the UK and Norway, which will enable the UK and Norway to share renewable energy resources, with each project worth over £1 billion: NSN (National Grid and Statnett) and NorthConnect (SSE, Vattenfall, Agder Energei, E-CO and Lyse);

• A deal between Shell and Gassco to strengthen UK energy security by providing British customers with more gas from Norway. By making better use of spare capacity in the UK gas transport system, Norwegian gas owners and transporters, including Shell, will be able to transport more gas from Norwegian fields via the Tampen Link to the FLAGS pipeline into St Fergus.

The joint statement by the two prime ministers is as follows:

‘The strong bilateral relationship between Norway and the United Kingdom is vital for our energy security and green growth. We have worked closely with business to create durable energy solutions for the future of the North Sea region to underpin sustainable economic development and prosperity of our citizens. We will establish a Business Advisory Group to support work of our officials and ministers to deliver our shared North Sea vision.

In January 2011, we agreed on energy and climate change priorities, including safe oil and gas extraction and supply, offshore wind, Carbon Capture and Storage (CCS), development of a North Sea power grid and UK-Norway electricity interconnection. Since then, we have achieved excellent results on these priorities.

We look forward to the conference on the achievements and future priorities of the UK-Norway energy partnership, to be held at London’s Royal Geographical Society in September, with the participation of representatives of our two governments and the British and Norwegian energy industries, as well as the academic community and the media.

Petroleum exploration on the Norwegian and UK Continental Shelves will continue to provide substantial energy supplies for the coming decades. We recognise the mutual interest of British and Norwegian companies in oil and gas exploration on both Shelves, with the latest licensing rounds attracting unprecedented levels of interest and offering significant opportunities. We note the development of technology to improve hydrocarbon recovery from mature fields and to enable sustainable development of Arctic energy. This is a great opportunity for the supply chain, and is based on the safest national environmental regulatory regimes in the world.

Natural gas has a vital role to play in the UK’s future energy mix, and Norway will continue to be a trusted, reliable supplier. The UK government will continue to actively support industry in agreeing new and enhanced long-term gas supply contracts, building on the £13bn long term supply contract signed between Centrica and Statoil in 10 Downing Street in November 2011, equivalent to 5% of annual UK gas demand.

We recognise the importance of such contracts in underpinning enhanced investments in pipeline and liquefied natural gas capacity, which diversify gas supplies and improve energy security. The UK is currently developing a gas generation strategy, setting out the role for gas-fired power in delivering a secure and affordable route to a low-carbon economy. CCS will enable gas to provide substantial electricity consistent with our climate change agenda.

We will promote green growth by developing policies to encourage clean energy technologies and projects. The UK’s Electricity Market Reform will create an enduring framework for investment in the UK with over £200bn in energy project opportunities. Similarly, Norwegian policies are creating new commercial opportunities for companies, particularly in the High North. The Norwegian-Swedish Green Certificate Scheme also offers incentives for British investors in renewable energy.

The UK is a leading world hub for offshore wind, and we are looking forward to the September opening of the Sheringham Shoal wind farm 100% financed by Norwegian companies. We are committed to developing the Dogger Bank the world’s largest offshore wind project with huge potential to drive business and technology development across the supply chain in our two countries.

It is a high priority for both our governments to support the development of electricity interconnection. This linkage will enable us to share renewable resources (hydro in Norway; wind in the UK) and thereby help us meet to our ambitious climate change targets. Interconnection will also deliver valuable benefits for society by supporting mutual security and flexibility of energy supply and by contributing to greater integration of the European electricity grid.

We are committed to bringing forward a diverse, low carbon energy mix to ensure energy security and meet our climate change targets in a sustainable way. The UK and Norway will work together to build on outcomes of the Rio+20 Conference, including further development of the Energy+ Initiative to increase clean energy access for developing countries. We will continue to coordinate our diplomatic initiatives and work for a successful COP18 in Doha. We look forward to completing the design of the Green Climate Fund to provide long-term finance for developing countries to make low-carbon transitions and adapt to climate change.

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