The boss of Norwegian energy giant Equinor has said he doesn’t expect gas and electricity bills to return to pre-Covid levels.
Anders Opedal told the BBC the shift from fossil fuels to less harmful energy sources means costs will remain high.
Mr Opedal also said unexpected taxes on energy companies would hurt investment in UK projects.
Energy companies have reported record profits on higher gas prices.
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Wholesale prices rose as Covid restrictions eased but surged higher after Russia invaded Ukraine and countries targeted the Kremlin with sanctions.
In recent weeks, gas prices have returned to pre-Russian invasion Ukraine levels, partly due to warmer weather across Europe.
However, gas and electricity bills for homes and businesses remain high, depressing the cost of living for many.
Equinor, which makes most of its money from oil and gas production, is one of Europe’s largest energy companies with operations in 36 countries around the world, including the UK.
Mr Opedal said it was doubtful gas and electricity bills would return at a time when a typical UK household was paying around £1,300 a year. The typical annual home bill is currently around £2,500 including UK Government help.
Mr Opedal said there was “a kind of rewiring of the whole energy system in Europe, especially after the gas was taken away from Russia”. He said huge investments in renewable energy would be needed, including using more hydrogen, for example.
“This is going to take a lot of investment and that investment has to be paid for, so I would expect energy bills might be a bit higher than they have been in the past, but not as volatile and high as they are today,” Mr Opedal said.
Looking to the future, he said, “We need to treat energy as something that is not available in abundance.”
“I think we’ve had much cheaper energy in the past and we’ve probably wasted some of it, so we need to make sure we’re making the right investments now [and] Everyone [should] consume as little energy as possible.”
Mr Opedal spoke to the BBC before attending the World Economic Forum in Davos, Switzerland, which is an annual gathering of politicians and business leaders. The theme of this year’s meeting, which will take place from January 16th to 20th, is “Working together in a fragmented world”.
Mr. Opedal assumed the position of Chief Executive and President of Equinor in November 2020 with a pledge to be “a force” in the green energy transition. He began his career as a petroleum engineer.
Equinor’s latest financial results reported a pre-tax profit of $24.3bn (£19.8bn) between July and September, compared with $9.7bn in the same period last year.
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Last year, the UK introduced a windfall tax on energy companies that have benefited from price increases.
Initially 25%, the so-called energy profit tax increases to 35% in January and remains in place until March 2028.
The tax applies to profits from the exploration of UK oil and gas, but not from other activities such as refining oil and selling petrol and diesel at service stations.
The scheme also allows companies to claim 91p worth of tax savings for every £1 invested in fossil fuel extraction in the UK.
Mr Opedal said that while the tax has not impacted Equinor’s investment strategy in the UK: “It does affect how we assess each project because we have to take into account how high the tax is in relation to all the other risks is.”
He cited the Rosebank oil field off the coast of Shetland, which Equinor intends to develop subject to government approval.
According to Equinor, the field could produce nearly 70,000 barrels of oil per day at its peak, accounting for 8% of the UK’s total oil production between 2026 and 2030.
However, environmental campaigners have called the plans a “total betrayal” of Britain’s climate goals.
Mr Opedal said: “There have already been two changes to the tax system and we are considering whether it will go further in the future? Rosebank is a project that we believe is needed in the UK in terms of energy security.”
He added: “Uncertainty about what the tax will be will be an important part of the decision [to go ahead] because, for example, we are still not profitable now in some fields that we have invested in, but we are already paying taxes based on the windfall taxes. So this is how we evaluate every project.”
Equinor’s Norwegian operations account for around two-thirds of its oil and gas business. The rest of the oil and gas business is spread across 30 countries, with two of the largest operations, the Peregrino field in Brazil and the Mariner field off Shetland, starting production in 2019.
The company also invests in renewable energy, including hydropower. It recently announced plans with Germany’s RWE to develop hydrogen-capable power plants.
The systems will initially be operated with gas, but can later be converted to use regeneratively produced hydrogen.
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