Ineos to develop oil and gas project in Denmark

Petrochemicals group Ineos is to develop an oil and gas field in Denmark after the country’s first approval of such a project in years.

The UK group’s announcement on Friday comes as Europe’s energy crisis prompts a search for alternatives to Russian gas. It also signals a shift in policy for Denmark, which had been moving away from fossil fuels.

Ineos will develop the Solsort West field in the North Sea with its partners Danoil and Nordsøfonden, with first production of oil and gas expected in the fourth quarter of 2023. Gas production from the field will cover 10 per cent of Danish consumption, Ineos said.

In approving the development this week, the Danish Energy Agency said the Solsort field was expected to account for 12 per cent of Danish oil production in 2024 and 5 per cent of gas production.

Mads Weng Gade, head of Ineos Energy DK, said the project was “the first Danish oil and gas development in many years”, and that it “will be a valuable contribution to Danish and European energy independency and self-sufficiency in a difficult period for Europe”.

But Tom Marzec-Manser, head of gas analytics at consultancy ICIS, questioned whether the project would have a material impact on Europe’s supply.

“Denmark consumes around 2bn cubic metres of gas annually. Based on what Ineos have said, this suggests Solsort production will be no more than 1.0 million cubic metres per day,” he said.

“Before the war Russia was sending 165mn cubic metres a day via Nord Stream 1, and European demand in the winter can be over 2bn cubic metres per day at the top end,” he said.

He added that Ineos’s development was “not going to alter Europe’s gas supply and demand balance in any structural sense”.

Denmark started extracting oil and then gas in the North Sea in 1972, with tax revenue a cornerstone in building and maintaining the country’s welfare state, but output has declined for years. Production peaked in 2004 for oil and 2005 for gas, according to the Danish Energy Agency.

The country’s biggest gasfield, Tyra, has been under redevelopment since late 2019, with production not expected to resume until 2023. The country became a net oil importer in 2018.

Denmark has become one of the global leaders in climate diplomacy. At the COP26 climate summit last year, the country, together with Costa Rica, formed a multinational group to end oil and gas production.

Danish officials said the move did not conflict with the country’s pledge, agreed with a majority in parliament, to end oil and gas production by 2050 and not approve any new exploration licences.

Denmark lost its main source of natural gas at the end of May when Gazprom, the Russian state company, stopped supplying it to Ørsted, the Danish energy group.

Additional reporting by Richard Milne in Oslo

Source link

Comments are closed, but trackbacks and pingbacks are open.