* Falling UK gas reserves, reduced nuclear power to create
new gas demand
* U.S. LNG imports, Russia gas prices a risk to Arctic gas
OSLO Oct 26 A rise in gas demand for power
generation in Europe after 2020 may provide a case to extract
gas from Norway's Arctic region, which is so far considered too
remote and expensive to compete in the market, an IEA official
said on Friday.
Norway plans to award oil and gas exploration drilling
permits in up to 86 blocks next year, mostly in the Arctic
region where exploration is booming after recent large
While the IEA predicts "five tough years in Europe" for gas,
in the long-term the demand is expected to rise, providing room
for imports from Norway's Arctic regions, Laszlo Varro, head of
the IEA's gas, coal and power markets division, told Reuters.
Developing offshore gas fields from first exploration to
building the pipeline or liquefied natural gas (LNG)
infrastructure to bring the gas to customers requires large and
"There is certainly room for new gas imports to Europe
around 2020," he said. "But it will also take time to develop
the Arctic gas," he added.
Because of diminishing British gas reserves and as a result
of nuclear decommissionings across the continent, Europe will
need more gas to generate power after 2020, Varro said.
But Varro said that the success of Norway's Arctic gas
exports would heavily depend on the amount of gas the U.S. will
begin to export to Europe in form of liquefied natural gas (LNG)
from 2015, and how Russian gas pricing develops in future.
"If Russia decides to sell bigger volumes to Europe at lower
prices, they certainly have a capability to do so," he added.
Norway's Arctic has become increasingly attractive after
several major discoveries in the region, and a landmark deal
with Russia settling a decades-long border dispute.
But Norway's state-owned oil and gas company Statoil
has recently dropped plans to expand its Snoehvit
natural gas field in the Arctic due to insufficient
(Reporting by Nerijus Adomaitis; editing by Henning Gloystein)