Norway Is Profiting from Europe's Fuel Shortages
- Equinor is increasing the production of aviation fuel at Mongstad to meet a potential fuel shortage in Norway.
- The Mongstad refinery can cover 60 percent of Norway’s aviation fuel needs, but operates in an open European market.
- Professor Frode Steen believes Equinor’s priority is both socially responsible and economically sensible.
- Norway has lower fuel stocks compared to neighboring countries, which worries NHO CEO Ole Erik Almlid.
Almost two months have passed since the US attacked Iran, and Iran responded by closing the Strait of Hormuz.
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Since then, the US has established its own blockade of the strait.
The situation has created unrest for the airline industry. If you are going to fly in the next few months, a lack of jet fuel could potentially affect you.
Six Weeks of Jet Fuel in Europe?
The International Energy Agency fears that Europe could run out of jet fuel. The IEA has stated that there are “maybe six weeks” left of jet fuel.
SAS and Lufthansa have made major cancellations, which they have explained with a need to save fuel and cut expenses.
“This increases Norwegian preparedness,” says NHH professor Frode Steen about the measure now being taken in Western Norway.
Taking Action
Due to the potential aviation crisis, action is now being taken in Norway. At the Equinor plant Mongstad outside Bergen, they are now turning up production.
As Norway’s only refinery, they will now prioritize the production of aviation fuel.
Mongstad says they can produce 60 percent of the needs for the Norwegian aviation industry, but that it is the market that rules and that Norwegian companies do not receive any advantages.
“We operate in an open market in Europe with supply and demand. That is where we get the best pay for our products. But the main part goes to the Norwegian market.”
This is what Bernt Tysseland, director of Mongstad, says.
He explains that Equinor tries to produce what the market needs.
“For Europe, jet fuel is what is most in demand now. We are responding to the fuel shortage by producing the maximum of our capacity.”
They Can Make Money from It
“They probably do it because they see that they can make money from it. And it probably has something to do with the fact that jet fuel has increased in price over time, especially recently. Then the rest of us should be happy that they do it, because it is needed.”
This is what Frode Steen, professor of economics at the Norwegian School of Economics, says.
He believes that Equinor’s priority is a combination of social responsibility and good business.
“Of course, it is important, because it has a social aspect to it. Therefore, it increases Norwegian preparedness,” says Steen.
Professor Steen says there is reason to trust international trade, but, according to him, because of the situation in Ukraine, “international trade can become problematic, and then you need more preparedness locally.”
Vulnerable in a More Turbulent World
Steen does not think that most people will notice anything about the production of jet fuel at Mongstad.
“But if many people do this around Europe and elsewhere, then it is clear that we will then have an increased supply of jet fuel. That means that there will be calmer prices and not least more secure supply.”
While neighboring countries Sweden and Finland have fuel stocks that can withstand 90 days of import suspension, Norway has since 2007 applied a requirement of only 20 days.
This worries NHO head Ole Erik Almlid.
“The fact that Equinor is now fully accelerating the production of aviation fuel at Mongstad shows how important it is to strengthen Norwegian energy preparedness,” says Almlid and adds:
“We currently have low stocks and are very dependent on imports of critical fuel. This makes us vulnerable in a more turbulent world.”
Almlid believes that the requirements have not been updated to reflect the worsening security situation.
“I believe that better access to fuel must be followed up by the authorities, with increased emergency stocks and better security of supply throughout the country.”
Source: NRK (in Norwegian)