The Norwegian Ministry of Oil and Energy announced on Friday that it plans to nationalize a majority of its gas pipeline network by the time many current concessions expire in 2028.
This move aims to increase control over critical infrastructure since Norway has now become Europe’s largest supplier of gas due to a decline in Russian gas flows, which it supplies through an extensive pipeline network stretching over 9,000 kilometres (5,590 miles).
The ministry also stated that it intends to exercise the right of repatriation at the end of the licensing period by sending a letter to licensees.
Without providing any explanation, the government stated its desire for complete state control of the central segments of Norway’s gas transportation infrastructure.
Norway is heavily involved in its own industry, owning major stakes in companies such as DNB (DNB.OL), Telenor (TEL.OL), and Equinor (EQNR.OL), among others. The Gassled partnership was established in 2003 by oil companies that were extracting gas from offshore Norway, and it owns the gas pipeline network, which cost billions of dollars to construct.
An executive from one of Gassled’s co-owners expressed surprise at the government’s decision. Kurt Georgsen, CEO of Silex Gas, a subsidiary of German insurer Allianz (ALVG.DE), noted that Norway’s petroleum policy has historically relied on joint ownership between private companies and the state, which has been successful. Georgsen stated that Silex Gas would collaborate with the government to reach an optimal ownership transfer solution.
Meanwhile, Swiss-based Partners Group (PGHN.S), which acquired Cape Omega, a Gassled co-owner, for 1.2 billion euros ($1.3 billion) in 2019, said it would cooperate “constructively” with the government to find a solution but did not provide further details.
As of now, the Norwegian state owns 46.7% of Gassled through Petoro, a state-owned enterprise, and the majority state-owned Equinor holds another 5%. The ministry noted that in certain instances, the government may have to provide compensation to other shareholders, without providing additional information.
An opposition party has raised doubts about the reasoning behind the government’s decision. Terje Halleland, the energy spokesperson for the right-wing Progress Party, stated that he saw no basis for nationalizing the pipelines, arguing that the government already controls Gassled, and the gas transportation industry is tightly regulated. Halleland believes that this move could have a detrimental impact on future investments in Norway’s continental shelf.
Gassled possesses the Kaarstoe and Kollsnes processing facilities, as well as the majority of the pipelines that distribute Norwegian gas to the European Union and the United Kingdom. The energy ministry did not specify which specific portions of the network would come under state control and was unavailable for additional comment at the time.
Oil firms have gradually decreased or sold off their stakes in Gassled, frequently to investment companies. In addition to Allianz and Partners Group, private equity company HitecVision is another co-owner of Gassled, although it has yet to respond to a request for comment. According to the energy ministry, Gassco, which serves as the infrastructure’s technical operator, will continue to do so under the new regime.
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