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Green Targets May Pose Political Danger To Gas Investment

Europe’s second-largest supplier of natural gas has warned that future investment in new production is at risk because of political uncertainty over the role of gas in the continent’s power generation sector.

Statoil, the oil company majority owned by the Norwegian government, has significantly increased gas sales in Europe in recent years, taking market share from Gazprom, the Russian gas giant, which has in the past cut off supply to pipelines that feed western Europe.

However, Rune Bjørnson, senior vice-president for natural gas at Statoil, told the Financial Times: “Continued political uncertainty around gas demand in Europe will ultimately have an effect on the willingness of producers, including ourselves, to invest in new gas supplies.”

His comments highlight increasing energy industry concern about the lack of clarity in European policy. Gas is expected to be important in some European Union states’ emission-reduction strategies by replacing more polluting coal in power generation. But utility companies, which account for more than a third of EU gas demand, are refusing to invest in gas-fired plants until governments spell out policies for the sector.

Eon, Germany’s biggest utility by revenues, is considering mothballing gas-fired power stations, Centrica has said it will not build any gas plants in the UK for at least four years and GDF Suez has taken a writedown on the value of gas-fired power plants across northwest Europe.

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