Norwegian state energy firm Petoro said it was becoming harder to tie oil and gas platforms to the electricity grid as planned, as it reported a 34% drop in profit for the second quarter on Wednesday due to petroleum prices falling sharply.
Petoro, which is 100% government owned, is not itself an operator, but is a partner in a large number offshore oil and gas fields, including many operated by majority-state controlled Equinor.
Norway is seeking to supply its offshore platforms with electricity from land, mainly generated by green hydropower, rather than from gas turbines on site, in a bid to sharply reduce national greenhouse gas emissions by 2030.
But higher costs as well as increased competition for electricity on land is making it more difficult to get access to power from the national grid and make the projects cost-effective, Petoro said in a statement.
"We see that it's becoming more challenging," Petoro CEO Kristin Kragseth said. "Both the discussion surrounding and the access to power from shore, coupled with higher cost levels, are significant contributors to this challenge."
Petoro's net profit fell to 153 billion crowns ($14.98 billion) in the April-June period from 230 billion crowns a year earlier, its earnings report showed.
For the full year 2022, Petoro booked a record profit of 539 billion crowns, the company reported in March.
"Petoro turned in yet another good quarterly profit, despite declining gas prices and certain production shutdowns in the second quarter," said Kragseth.
Norway last year became Europe's largest supplier of natural gas as Russia's Gazprom GAZP.MM cut deliveries over the West's support for Ukraine, sending European gas prices to all-time highs.
The government saves revenue from Petoro and other oil and gas companies in the Norwegian sovereign wealth fund, one of the world's largest investors, with assets currently worth $1.5 trillion.
($1 = 10.2138 Norwegian crowns)
(Reuters - Reporting by Terje Solsvik, editing by Gwladys Fouche and Sharon Singleton)
