Petoro: High commodity prices not sustainable
The head of state-controlled Norwegian energy company Petoro said October 27 that commodity prices at this level are not sustainable.
Petoro said total oil and gas production during the third quarter averaged 1mn barrels of oil equivalent per day, about 20% higher than during the same period last year. The company attributed the gain to higher gas production from the Troll and Osberg fields offshore Norway, as well as increased output from the giant Johan Sverdrup oil field.
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Cash flow for third quarter was NOK 44bn ($5.2bn USD), the highest ever single-quarter figure in the company’s history. Earnings for major energy majors have improved over year-ago levels, particularly amid soaring commodity prices. Both crude oil and natural gas prices are at multi-year highs.
"We've experienced a substantial increase in energy prices, particularly over the last six months, and prices are now so high that this is not sustainable at length," said Petoro CEO Kristin Kragseth.
Kragseth attributed the gains in commodity prices to a complex set of factors, from weather conditions impacting renewable-driven power generation to the mounting demand pressures during the post-vaccination stage of the pandemic.
Most markets remain undersupplied, though Russian energy company Gazprom said recently it was committed to filling European natural gas storage. Apart from Russia, Norway is one of the major oil and natural gas suppliers for the UK and European economies.
The Troll field alone supplies around 8% of EU gas consumption.
Kragseth said price-driven increases in revenue come with a social cost, particularly as the European economy struggles with lingering inflation and the prospects of costly bills during the winter heating season.
Even still, she said natural gas has a role in the energy transition.
“If the wind isn't blowing, no power is being generated,” she said. “This demonstrates the vulnerability of the energy system, and not least our continued reliance on stabilising energy sources such as gas," Kragseth said.