Statoil threatens UK gas supplies over green policies

Norway’s Statoil has threatened to sell its North Sea natural gas to other markets if the UK’s Energy Sec. Chris Huhne prevails in his efforts to expand the country’s use of renewable energy and curb the growth of fossil fuel power plants.

“We will continue to develop new production in the North Sea, but the question is which market it finds its way into,” said Rune Bjornson, Statoil vice-president, natural gas.

“There are other places we can export the gas to apart from the UK. We have the gas you need if you want it,” Bjornson said.

“The UK is one of the most challenging markets at the moment when it comes to reading the future energy policy,” said Bjornson, adding, “We are getting different signals from different parts of government—we don't know which opinion will prevail.”

Bjornson’s remarks come amid a very public disagreement over the UK’s energy policy between Huhne, a Liberal Democrat, and his fellow Cabinet minister George Osborne, the Conservative Chancellor of the Exchequer.

Indeed, Huhne last week used a speech to attack “green economy deniers” in what was widely seen as a reference to Osborne.

Speaking at the industry body RenewableUK conference, Huhne said the UK’s green economy was creating thousands of jobs and growth at a time when the headlines were dominated by closures and cuts.

In a direct challenge to Osborne, who warned in his speech to the Conservative party conference against pursuing green goals at the expense of business, Huhne said, “We’re not going to save our economy by turning our back on renewables.”

Huhne challenged what he called the “unholy alliance of climate skeptics and armchair engineers” over the claims that renewables are uneconomic, unreliable, and unwanted.

Huhne told the conference that polls showed people preferred green technologies such as solar, wind, hydroelectric, and biomass to traditional fossil fuels, and that 73% would support a new wind farm in their area compared to just 21% backing a new coal plant.

Louise Hutchins of environmentalist activist organization Greenpeace underlined Bjornson’s concerns over the disarray in the UK government.

“It is increasingly clear that there's a green war at the heart of this government,” said Hutchins. “Chris Huhne is making a strong case for the strategic role renewable energy can play in creating jobs and reducing carbon dioxide emissions, while George Osborne seems to be in perpetual denial about the benefits of investing in green growth.”

Statoil’s threat comes as the UK’s dependence on imported natural gas increased by almost a third during 2009-10, with 60% of the total coming from Norway.

Statoil sells about half the gas it supplies to the UK through long-term contracts with such firms as Centrica and Scottish and Southern Energy.

Contact Eric Watkins at hippalus@yahoo.com.

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