Home Commodities Ineos to develop oil and gas project in Denmark

Ineos to develop oil and gas project in Denmark

by SuperiorInvest

Petrochemicals group Ineos is to build an oil and gas field in Denmark after the country approved such a project for the first time in years.

The UK group’s announcement on Friday comes as European energy crisis encourages the search for alternatives to Russian gas. It also signals a shift in policy for Denmark, which has moved away from fossil fuels.

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

Approving the development this week, the Danish Energy Agency said the Solsort field is expected to account for 12 percent of Denmark’s oil production and 5 percent of gas production in 2024.

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 independence and self-sufficiency in a difficult period. for Europe”.

However, Tom Marzec-Manser, head of gas analytics at consultancy ICIS, questioned whether the project would have a major impact on European supplies.

“Denmark consumes around 2 billion cubic meters of gas annually. Based on what Ineos has said, this suggests that Solsort’s production will not exceed 1.0 million cubic meters per day,” he said.

“Before war Russia has been sending 165 million cubic meters per day through Nord Stream 1, and European winter demand can exceed 2 billion cubic meters per day at the top end,” he said.

He added that Ineos’ development “will not change the European balance of gas supply and demand in any structural sense”.

Denmark began drilling for 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 production has declined for years. According to the Danish Energy Agency, production peaked in 2004 for oil and 2005 for gas.

The country’s largest gas field, Tyra, has been under construction 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 last year’s COP26 climate summit, the country, along with Costa Rica, created a multinational group to end oil and gas extraction. In 2020, it also decided to end all new oil and gas exploration in the North Sea.

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