Norwegian energy industry giant Equinor has entered long long-term gas sales agreements with Germany’s state-owned energy company SEFE (Securing Energy for Europe), which also cover prospects for low-carbon hydrogen supplies.
Under the agreements Equinor will supply SEFE with 111 TWh (ca 10 billion cubic meters - bcm) of natural gas per year from 1 January 2024 until 2034, with an option for another 5 years, at terms reflecting market prices.
The annual volumes are equivalent to one third of German industrial demand.
The 5-year option is for a total of 319 TWh (around 29 bcm) over the period. The companies also signed a non-binding letter of intent (LoI) with the intention that SEFE will become a long term off-taker of giga-scale, low-carbon hydrogen supplies from Equinor starting in 2029 and continuing towards 2060.
“This is a response to Europe’s need for long-term, reliable supply of energy and a viable route to decarbonization at scale.
“The total volumes we have agreed make this one of the largest agreements we have made as a company, and the supplies will contribute to energy security for Germany and Europe,” said Equinor’s CEO Anders Opedal.
Egbert Laege, CEO of SEFE, added: "The procurement of natural gas from the Norwegian continental shelf ensures the sustainable and future-proof supply for European and, in particular, German customers in the household and industrial sectors.
“SEFE and Equinor share ambitious goals to accelerate the development of the hydrogen economy. This includes joint business opportunities related to transport and storage of hydrogen for the future. SEFE Group's storage company Astora could be a key building block in this.”
A key element in the potential collaboration on hydrogen is that SEFE could be a long-term off-taker of low-carbon hydrogen from projects that Equinor is planning on the continent and in Norway.
The clear ambition is to supply low-carbon hydrogen to SEFE at industrial scale, starting from 5 TWh per year from 2029 and ramping stepwise up to 40 TWh per year from 2050 towards 2060.
The gas will be delivered to Trading Hub Europe (THE) in Germany, Title Transfer Facility (TTF) in the Netherlands and at the National Balancing Point (NBP) in the UK.