Ownership in the upstream gas pipeline network
Press release | Date: 02/05/2023 | Ministry of Energy
The overall objective of Norway’s petroleum policy is to facilitate profitable production of oil and gas in a long-term perspective. The upstream gas pipeline network, and its regulation, plays a key role in achieving this fundamental objective.
This means that the resource rent shall be realised in exploration and production and not the transportation system. The tariffs for use of the transport system shall reflect the socio-economic cost of transport and treatment of gas in the system. As resource owner, it is important to ensure that the system is operated cost-efficiently with low tariffs, has a high level of regularity and flexibility, and that optimal and holistic decisions relating to further development of the systems are made.
Large parts of the infrastructure in the Gassled partnership have license periods that expire in 2028, and the state has the right of reversion at the end of the license period. Other parts of the gas transport system have longer license periods. Certain systems do not have an explicit license period.
The Ministry of Petroleum and Energy has today sent a letter to relevant licensees signalling that the state aims to make use of the right of reversion at the end of the license period and wants a full state ownership of the key parts of the upstream pipeline network.
Where takeover possibly requires compensation, the ministry assumes that such compensation must be based on the future expected net income that the owners of the infrastructure will have from their position.
A possible transition to state-owned ownership is assumed to be value-neutral for the state. This means that the state's ownership costs of the system are fully covered by future tariff revenues.
The main features of the regulation of the gas transport system are expected to be continued also after 2028. It means that Gassco will continue to be the operator of the system and use technical service providers. That tariffs will be cost-based. Investments in new gas infrastructure on the continental shelf will, as currently, continue to be driven by the commercial players and their need for gas transport. With this established practice, a market test is ensured when developing new infrastructure.
About the gas transport system: The oil and gas pipeline system - Norwegianpetroleum.no