Gas-to-Power Contract: Statoil (Norway) to deliver spot-indexed gas to power utility Stadtwerke Düsselford (Germany)

Statoil announced on 13 June 2013 that the company just concluded a 15-year contract for the supply of natural gas to the 600 MW combined cycle gas turbine (CCGT) plant owned by Stadtwerke Düsseldorf, with delivery starting in 2016.

Viewed from a Norwegian and supplier perspective, one innovation of this contract is the indexation of the gas price to spot gas market. This has become a more common practice in the UK (e.g., through Britain's National Balancing Point) and to a certain extend in The Netherlands, but not yet in the most majority of the gas supply contracts, as the European Commission would have wished and called upon. So Norway is following the trend. In that, "the agreement builds on the liberalising gas, power and emissions markets and the available market price indices." In other words, "it represents a new type of partnership in the German gas-to-power market". See press release from Statoil (13.06.2013).

Another important aspect underlying the agreement is the further use of gas in power generation. The European gas industry is keen to promote further the use of natural gas in different segments of the power industry, and this has to be seen an example of such strategy. In the meantime, Rune Bjørnson, senior vice president responsible for Statoil's Natural Gas business unit, points out the "very unfavourable regulatory framework for gas-to-power".